The Following Information Is Taken from the Production Budget for the First

question 45

Multiple Choice

The following information is taken from the production budget for the first quarter: How many finished goods units should be produced during the quarter if the company desires 800 units available to start the next quarter?

• A)114,500
• B)113,500
• C)118,500
• D)114,800

Learn the financial implications and accounting for freight costs under different shipping terms (FOB shipping point vs. destination).

Understand the use of Refund Liability (deferred revenue) accounts for tracking expected sales returns and allowances.

Calculate purchase discounts and comprehend their effect on inventory costs and accounting records.

Recognize the importance of physical inventory counts in both perpetual and periodic inventory systems.

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Definitions:

Inventory Turnover

A ratio showing how many times a company's inventory is sold and replaced over a period, indicating the efficiency of inventory management.

Freight-in Costs

Expenses incurred in transporting goods from the vendor to the buyer, which are often added to the cost of the goods purchased.

Inventory Inspection Costs

Expenses incurred during the examination of inventory for defects, quality, and compliance with specifications.

Inventory Preparation Costs

Expenses associated with getting inventory ready for sale, including sorting, repackaging, or labelling.