Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 7, Problem 8E
Deducing Changes ¡n Inventories LO7—3
Parker Products, Inc. is a manufacturer whose absorption costing income statement reported sales of $123 million and a net operating loss of$18 million. According to a CVI’ analysis prepared formanagement, the company’s break-even point is $115 million in sales.
Required:
Assuming that the CVP analysis is correct, is it likely that the company’s inventory level increased, decreased, or remained unchanged duringthe year? Explain.
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Students have asked these similar questions
Measuring profitability based
on different inventory and
amortization methods
1. Net income: Zastre Associates,
$116,000
12000
27000
DP10-1
Suppose you are considering investing in two businesses, Zastre Associates and Chen Co.
The two companies are virtually identical, and both began operations at the beginning of
2020. During the year, each company purchased inventory as follows:
Jan. 10
Mar. 11
Jul. 9
Oct. 12
Totals
12,000 units at $7 = $ 84,000
5,000 units at $9
45,000
10,000 units at $10
100,000
12,000 units at $11
132,000
$361,000
39,000
=
-
During 2020, both companies sold 30,000 units of inventory.
In early January 2020, both companies purchased equipment costing $400,000 that had
a five-year estimated useful life and a $40,000 residual value. Zastre Associates uses the first-
in, first-out (FIFO) method for its inventory and straight-line amortization for its equipment.
Chen Co. uses the weighted-average method for inventory and DDB amortization. Both
companies' trial balances…
16.
Quick assets P208,000
Acid test ratio 2.6 to 1
Current ratio 3.5 to 1
Net sales for the year P1,800,000
Cost of sales for the year P990,000
Average total assets P1,200,000
The company’s inventory balances at December 31 is?
The company’s asset turnover ratio for the year is?
Problem 14-1 (AICPA Adapted)
Sublime Company showed the following information a-
Estimated normal shrinkage is 2% of sales.
The entity used the conservative retail inventory method in
estimating the value of inventory.
PROBLEMS
year-end:
Cost
Beginning inventory
Sales
Purchases
Freight in
Markup
Markup cancelation
Markdown
Markdown cancelation
Retimated normal shrinkage is 2% of sales.
Retail
280,000
2,480,000
75,000
700,000
5,000,000
5,160,000,
500,000
60,000
250,000
50,000
The entity used the conservative retail inventory method in
estimating the value of inventory.
What, is the estimated cost of ending inventory?
a. 460,000
b. 450,000
c. 495,000
d. 506,000
Chapter 7 Solutions
Introduction To Managerial Accounting
Ch. 7 - What is the difference between absorption costing...Ch. 7 - Are selling and administrative expenses treated as...Ch. 7 - Explain how fixed manufacturing overhead costs are...Ch. 7 - What are the arguments in favor of treating fixed...Ch. 7 - What are the arguments in favor of treating fixed...Ch. 7 - Prob. 6QCh. 7 - If the units produced exceed the units sold, which...Ch. 7 - Prob. 8QCh. 7 - Prob. 9QCh. 7 - How does Lean Production reduce or eliminate the...
Ch. 7 - Prob. 11QCh. 7 - Prob. 12QCh. 7 - Distinguish between a traceable fixed cost and a...Ch. 7 - Explain how the contribution margin differs from...Ch. 7 - Why aren’t common fixed costs allocated to...Ch. 7 - How is it possible for a fixed cost that ¡s...Ch. 7 - Should a company allocate its common fixed costs...Ch. 7 - Prob. 1AECh. 7 - Prob. 2AECh. 7 - Prob. 3AECh. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 2F15Ch. 7 - Prob. 3F15Ch. 7 - Prob. 4F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 6F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 8F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 10F15Ch. 7 - Prob. 11F15Ch. 7 - Prob. 12F15Ch. 7 - Prob. 13F15Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Diego Company manufactures one product that is...Ch. 7 - Prob. 1ECh. 7 - Variable Costing Income Statement; Explanation of...Ch. 7 - Reconciliation of Absorption and Variable Costing...Ch. 7 - Prob. 4ECh. 7 - Prob. 5ECh. 7 - Prob. 6ECh. 7 - Prob. 7ECh. 7 - Deducing Changes ¡n Inventories LO7—3 Parker...Ch. 7 - Variable and Absorption Costing Unit Product Costs...Ch. 7 - Prob. 10ECh. 7 - Segmented Income Statement L07—4 Wingate Company,...Ch. 7 - Prob. 12ECh. 7 - Prob. 13ECh. 7 - Variable Costing Unit Product Cost and Income...Ch. 7 - Absorption Costing Unit Product Cost and Income...Ch. 7 - Working with a Segmented Income Statement;...Ch. 7 - Prob. 17ECh. 7 - Prob. 18PCh. 7 - Variable Costing Income Statement; Reconciliation...Ch. 7 - Variable and Absorption Costing Unit Product Costs...Ch. 7 - Segment Reporting and Decision-Making L07—4 Vulcan...Ch. 7 - Prob. 22PCh. 7 - Absorption and Variable Costing; Production...Ch. 7 - Companywide and Segment Break-Even Analysis;...Ch. 7 - Prepare and Interpret Income Statements; Changes...Ch. 7 - Prob. 26PCh. 7 - Variable and Absorption Costing Unit Product Costs...
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