Inventory Management – MCQs

True Tamplin

Written by True Tamplin, BSc, CEPF®
Updated on September 9, 2021

Take this quick test on inventory management to help you prepare for your exams and interviews. This test is especially useful for accounting and finance students.

The multiple choice question (MCQ) quiz has 10 questions with 4 potential answers each. Once you complete this short quiz, you should be able to perform well in any related exam or interview.

1. Safety stock + EOQ is equal to:

2. The name for an order size that minimizes inventory ordering and carrying costs is:

3. Which one of the following is not an ordering cost?

4. Which one of the following is not a carrying cost?

5. Extra inventory carried to serve as insurance against fluctuations in demand is called:

6. Boomerang Ltd. had 200 units in its inventory on 30 November valued at $800. In December, it made the purchases and sales shown in the table below.
2/12Purchased1,000@$5.00 each
5/12Sold700@$7.50 each
12/12Purchased800@$6.20 each
15/12Purchased300@$6.60 each
21/12Sold400@$8.00 each
28.12sold500@$8.20 each
Using FIFO, which of the following is the inventory valuation?

7. The following information relates to Camberwell's year-end inventory of finished goods.
Direct costs of materials and laborProduction overheads incurredExpected selling and distribution overheadsExpected selling price
$$$$
Inventories category 12,4702,1004805,800
Inventories category 29,3602,76015012,040
Inventories category 31,4508501902,560
13,2805,68082020,400
At what amount should the finished goods inventory be stated in the company's statement of financial position?

8. At its year-end, Crocodile Ltd. has 600 items of product A and 2,000 of product B, costing $10 and $5, respectively. The following information is available: 500 items of product A are defective and can only be sold at $8 each; 100 items of product B are to be sold for $4.50 each with selling expenses of $1.50 each. What figure should appear in Crocodile's statement of financial position for the inventory?

9. In a period of rising prices, the FIFO method of charging inventory issues to production will show a lower gross profit figure compared to the AVCO method.

A. True

B. False

Closing inventory is a debt in the income statement.

C. True

D. False

10. Your firm's inventory valuation method is AVCO. On 1 June, there were 60 units in the inventory valued at $12 each. On 8 June, 40 units were purchased for $15 each and a further 50 units were purchased for $18 each on 14 June. On 21 June, 78 units were sold for $20 each. What is the value of the closing inventory on 30 June?


 


Next Quiz: Budgeting MCQs

Related posts:

  1. Inventory Control System
  2. Application of Different Cost Flow Assumptions
  3. Perpetual Inventory System
  4. Inventory Turnover Ratio
  5. By-Products
True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True contributes to his own finance dictionary, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, his interview on CBS, or check out his speaker profile on the CFA Institute website.

Related posts:

  1. Inventory Control System
  2. Application of Different Cost Flow Assumptions
  3. Perpetual Inventory System
  4. Inventory Turnover Ratio
  5. By-Products

Leave a Comment