Fall 2011 - term test #2.doc - solutions(2)

Fall 2011 - term test #2.doc - solutions(2) - RSM219 Term...

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RSM219 Term Test #2 Fall 2011 Part A (10 marks) 1. D 2. A 3. A 4. B 5. D 6. D 7. D 8. B 9. D 10. D Part B (10 marks) 1. Calculate the missing amounts and identify them by letter (6 marks) (a) $475,000 (d) $825,000 (b) $220,000 (e) $553,000 (c) $200,000 (f) $250,000 2. (2 marks) Gross Margin Company A – 44.4% Company B – 30.3% Profit Margin % Company A – 33.44% Company B – 20.7% Reasonable conclusion that Company A is more profitable compared to Company B and the industry average
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3. (2 marks) A B Average Inventory = Beginnning Inventory $220,000 $325,000 Ending Inventory $170,000 $303,000 Divided 2 $195,000 $314,000 Turnover = CGS $250,000 $575,000 Avg. Inv. $195,000 $314,000 = 1.28 1.83 Days Says In Inventory = 365 days 365 days 1.28 1.83 = 285 days = 199 days Reasonable conclusion that Company B has a better inventory management system. Part C (10 marks) Calculate: Perpetual inventory system Periodic inventory system Cost of goods sold assuming Pacioli uses FIFO $618 = $60 +$264 +$126 +(35*$4.80) ( 1 points ) $618 = $60 +$264 +$126 +(35*$4.80) ( 1 points ) Ending inventory assuming Pacioli uses FIFO $48 = 10*$4.80 ( 1 points ) $48 = 10*$4.80 ( 1 points ) Cost of goods sold assuming Pacioli uses average cost Jan. 7 sale $280.80 = ($60 +$264) / (15 +60) *65 ( 1 point ) Jan. 29 sale $339.88 = ($60 +$264 -­૒$280.80 +$126 +$216) /(15
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