Jasper Owns a Small Retail Store as a Sole Proprietor

question 17

Multiple Choice

Jasper owns a small retail store as a sole proprietor.The business records show that the cost of the store's inventory items has been steadily increasing.The cost of the end of the year inventory is $200,000 and the cost of the beginning of the year inventory was $250,000.Jasper uses the FIFO method of inventory valuation.Which of the following statements is true?

• A)Jasper purchased more inventory during the year than he sold during the same one-year period.
• B)Jasper would have a higher net income if he used the LIFO method of inventory valuation instead of the FIFO method.
• C)Jasper has apparently decreased the volume of items in his ending inventory as compared to the number of items in his beginning inventory.
• D)Since the cost of the store's inventory items is increasing, Jasper will have a greater cost of goods sold figure under FIFO than LIFO.
• E)None of the above.

Understand the treatment of underapplied or overapplied overhead in financial records.

Understand and apply the concept of predetermined overhead rates in the calculation of applied manufacturing overhead.

Identify and calculate underapplied or overapplied manufacturing overhead and its implications.

Understand the distinction between job-order costing and process costing systems.

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Definitions:

Situation (SWOT) Analysis

A strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project, business venture, or an organization's overall strategic positioning.

Planning Phase

The initial stage in a project or strategy where objectives are defined and approaches are determined.

Diversification Analysis

The process of identifying and implementing new business opportunities outside a company's current products, services, or markets to reduce risk.

Marketing Plan

A detailed strategy for identifying target markets and how to reach them, outlining marketing objectives, tactics, and measures of success.