On December 31,2014,you Count 300 Tie Clips in Inventory

question 183

Multiple Choice

On December 31,2014,you count 300 tie clips in inventory.During the next quarter,you carefully record the effect of each purchase and sale transaction on inventory.You buy 128 tie clips during the next quarter.On March 31,2015,you count 288 tie clips in inventory.Which of the following is not correct?

• A) Ending inventory on March 31, 2015 should be 288 tie clips.
• B) Your company uses the perpetual inventory method.
• C) Your company's records would show that 140 tie clips were sold during the quarter.
• D) The amount of shrinkage cannot be determined with this type of inventory system.

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Definitions:

Normal Absorption Costing

A method of product costing that assigns all manufacturing costs to products, including both variable and fixed overhead, based on a normal level of operation.

Budgeted Rate

A predetermined rate used in budgeting to estimate costs or revenues for a specific activity or product.

Work in Process

Inventory that includes materials that have been partially processed but are not yet finished goods.

Overhead Costs

Indirect expenses related to the day-to-day running of a business, not directly tied to specific product or service production.