Fairy Gardens Ltd Uses a Periodic Inventory System with the Weighted

question 19

Multiple Choice

Fairy Gardens Ltd uses a periodic inventory system with the weighted average method of cost assignment. The following data are available.
$$\begin{array} { l l r c l } & \text { Date } & \underline { \text { Units } } & \underline { \text { Unit } } \underline { \text { Cost } } & \frac { \text { Total } } { \text { Cost } } \\\\\text { Beginning inventory } & \text { Jan 1 } & 500 & \$ 10 & \$ 5000 \\\text { Purchase } & \text { Mar } 15 & 1500 & \$ 12 & \$ 18000 \\\text { Purchase } & \text { June 8 } & 2000 & \$ 13 & \$ 26000 \\\text { Ending inventory } & \text { Dec } 31 & 1000 & &\end{array}$$
The cost of the ending inventory to the nearest dollar is:

• A) $ 5 000.
• B) $12 250.
• C) $13 000.
• D) $49 000.

Describe the considerations in calculating the Weighted Average Cost of Capital (WACC) for new capital budgeting projects.

Explain the impact of flotation costs and other factors on the cost of new equity.

Recognize the differences between the cost of capital components and the returns paid to investors in the underlying securities.

Understand the importance of market values in maintaining or achieving a firm's capital structure.

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Definitions:

Variable Selling Expenses

Selling costs that fluctuate with sales volume, such as commissions for sales staff.

Break-Even Sales

The amount of revenue required to cover all fixed and variable expenses, resulting in zero profit.

Variable Expenses

Expenses that vary directly with the level of production or sales, such as raw materials and direct labor costs.

Fixed Expenses

Costs that do not fluctuate with the level of production or sales, including rent, salaries, and insurance premiums.