Quiz9BB (with Answers) - Fall 2003 Hulstein & Hulstein...

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Fall 2003 Intermediate Accounting Chapter # 9 Quiz B Name _________________________ 1. Designated market value a. is always the middle value of replacement cost, net realizable value, and net realizable value less a normal profit margin. b. should always be equal to net realizable value. c. may sometimes exceed net realizable value. d. should always be equal to net realizable value less a normal profit margin. 2. Lower of cost or market a. is most conservative if applied to the total inventory. b. is most conservative if applied to major categories of inventory. c. is most conservative if applied to individual items of inventory. d. must be applied to major categories for taxes. 3. Milo Corporation has two products in its ending inventory, each accounted for at the lower of cost or market. A profit margin of 30% on selling price is considered normal for each product. Specific data with respect to each product follows: Product #1 Product #2 —————————— —————————— Historical cost $30.00 $ 60.00 Replacement cost 35.00 54.00 Estimated cost to dispose 10.00 26.00 Estimated selling price 70.00 120.00 In pricing its ending inventory using the lower of cost or market, what unit values should Milo use for products #1 and #2, respectively? a. $30.00 and $58.00. b. $39.00 and $58.00. c. $39.00 and $60.00. d. $35.00 and $54.00. 4. A markup of 40% on cost is equivalent to what markup on selling price? a. 29% b. 35% c. 40% d. 60%
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Chapter # 9 Quiz B--Page 2 5. Miller, Inc. estimates the cost of its physical inventory at March 31 for use in an interim financial statement. The rate of markup on cost is 25%. The following account balances are available: Inventory, March 1 $220,000 Purchases 172,000 Purchase returns 8,000 Sales during March 350,000 The estimate of the cost of inventory at March 31 would be a. $34,000. b. $104,000.
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Quiz9BB (with Answers) - Fall 2003 Hulstein & Hulstein...

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