Toyland Town Was Counting on Wireless Wendy's Being the Hot

question 15

Essay

Toyland Town was counting on Wireless Wendy's being the hot new toy for the 2013 Christmas season.They made the following purchases and sales related to the toy: $\begin{array}{l}&\text { Units }\\&\text { Purchased}&\text { Unit Cost}&\text { Total Costs}&\text { Units Sold }\\\text { Opening Inventory: }\\\text { Purchases: }\\\text { August } 15 & 4,000 & \$ 6.00 & \$ 24,000 \\\text { September } 30 & 12,000 & \$ 7.00 & \$ 84,000 \\\text { November } 10 & 15,000 & \$ 7.50 & \$ 112,500\end{array}$ Sales
$\begin{array}{lr}\text { October } & 6,000 \text { units } \\\text { November } & 10,500 \text { units } \\\text { December } & 1.500 \text { units }\end{array}$ Unfortunately, in December there was a story in the newspaper about quality problems with the doll and low customer satisfaction.The manufacturer offered to sell Toyland the rest of their inventory at the original price of $6.00 per unit.The company uses a periodic inventory system.
Required:
A) If Toyland Town uses FIFO and the lower of cost or market, where market is defined as replacement cost, what would be the value of the Wireless Wendy inventory on December 31, 2013?
B) Based on your answer in part A) what costs related to Wireless Wendy would be on the 2013 income statement?
C) Do you have any other concerns about Toyland's inventory valuation at year-end?

• A) If Toyland Town uses FIFO and the lower of cost or market, where market is defined as replacement cost, what would be the value of the Wireless Wendy inventory on December 31, 2013?
• B) Based on your answer in part A) what costs related to Wireless Wendy would be on the 2013 income statement?
• C) Do you have any other concerns about Toyland's inventory valuation at year-end?

---

Definitions:

Pretest-Posttest Nonequivalent Groups Design

A quasi-experimental research design where one group is tested before and after an intervention and compared to a control group not receiving the intervention.

Interpretable Nonequivalent Groups Design

A research design involving comparison between groups that are not randomly assigned but are compared on outcomes to assess treatment effects.

History

A field of study concerned with the analysis and interpretation of past events.

Internal Validity

The extent to which a study can establish a cause-and-effect relationship free from external influences or confounding variables.