Inventory Management Paper 5


A company determined the following information for its inventory at the end of an interim period on June 30, Year 2:
Historical cost......................... $80,000
Net realizable value (NRV).......... 77,000
Current replacement cost ...........76,000
Normal profit margin................. 2,000
The company expects that on December 31, Year 2, the inventory’s NRV reduced by a normal profit margin will be at least $81,000. What amount of inventory should the company report in its interim financial statements under IFRS and under U.S. GAAP on June 30, Year IFRS
U.S..... GAAP


All of the following would appear on a projected schedule of cost of goods manufactured except for


A manufacturer of men’s t-shirts had the following information for last year.
Number of shirts sold and produced.. 125,000
Sale price per shirt.. $40
Direct manufacturing.. $10/shirt
Setup cost.. $100/setup hour
Setup hours.. 10,000
Shipping costs.. $200/shipment
Number of shipments.. 4,000
Administrative cost.. $8/shirt
The company’s operating profit last year was


A retail company analyst is comparing North Company to South Company. The analyst notes that receivables for both companies’ private label credit cards have significantly increased balances in the current year. North’s customers’ monthly payment averaged 15% of their balances, while South’s customers’ monthly payment averaged 22% of their balances. What should the analyst conclude?


The optimal level of inventory is affected by all of the following except the


Which one of the following would not be considered a carrying cost associated with inventory?


An example of a carrying cost is


The carrying costs associated with inventory management include


The ordering costs associated with inventory management include


A major supplier has offered Alpha Corporation a year-end special purchase whereby Alpha could purchase 180,000 cases of sport drink at $10 per case. Alpha normally orders 30,000 cases per month at $12 per case. Alpha’s cost of capital is 9 . In calculating the overall opportunity cost of this offer, the cost of carrying the increased inventory would be


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