QUESTION 1

Which one of the following types of costs is excluded from the cost of inventory that is routinely manufactured?

		interest
		raw materials
		normal spoilage
		insurance

QUESTION 2

On July 1, Maxwell Company had 40 units of inventory at a cost of $6 per unit. July purchases and sales were as follows:

	Purchases		Sales
July 5	10 units @ $8	July 4	20 units
12	20 units @ $10	20	12 units
25	10 units @ $16

The cost of goods sold during July was $272. Maxwell must use:

		FIFO
		LIFO perpetual
		weighted average
		LIFO periodic

QUESTION 3

Exhibit 7-1 Edwards Co. purchased raw materials with a cost of $95,000 on March 2, 2014. Credit terms of 3/20, n/60 applied. If Edwards pays for the purchase on March 18, 2014, calculate the amount recorded for inventory on March 2, 2014, using the method given. Refer to Exhibit 7-1. Edwards uses a perpetual inventory system and the net price method.

		$42,000
		$76,000
		$92,150
		$95,000

QUESTION 4

Eller Company uses a periodic inventory system. Relevant inventory information for the year follows:

1-Jan	Beginning inventory	20 units @ $170 per unit
23-May	Purchased	20 units @ $135 per unit
5-Nov	Purchased	400 units @ $185 per unit
18-Nov	Purchased	100 units @ $195 per unit

At year-end, 50 units remain in inventory. What is the cost of the ending inventory on a LIFO basis?

		$7,950
		$7,100
		$8,750
		$8,450

QUESTION 5

Near the end of 2015, Spruce Co. made the following purchases. The months involved in all cases are December 2015 and January 2016.

		Date	Date	Date	Date
		Goods	Invoice	Goods	Invoice
Amount	FOB	Shipped	Mailed	Rec'd	Rec'd
$1,575	Destination	12/29	1/2	1/5	1/4
2,430	Shipping Point	1/2	12/29	1/4	12/30
1,890	Shipping Point	12/28	1/2	1/3	1/4
2,700	Destination	12/29	12/27	1/2	12/28

What amount of the above purchases should be included in Spruces inventory at December 31, 2015?

		$1,575
		$1,890
		$4,320
		$4,575