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# Purchases, Inventory and Cost of Goods Sold (COGS)

### An expanded version of the accounting equation could be:

A. A + Rev = L + OE - Exp B. A - L = Paid-in Capital - Rev - Exp C. A + Exp = L + Beginning Paid-in Capital + Rev D. A = L + Paid-in Capital - Rev + Exp

### Inventory-Ordering Cost

Mr. Paul sells 3600 electric motors each year. The cost of these motors is \$200 each, and demand is constant throughout the year. The cost of placing an order is \$40, and the holding cost is \$20 per unit per year. There are 360 working days per year and the lead time is five days. If Mr. Paul orders 200 units each time he places

### Maximum Inventory Level

Peter is a production manager for a manufacturing firm that produces staplers. The annual demand for the stapler is 1,600 units. The holding cost is \$2 per unit, per year. The cost of setting up the production line for this is \$25. There are a total of 200 working days per year. The production rate for this product is 80 per

### Budgeting: Operating Expenses, Cost of Goods and Net Income

Use the following to answer questions 47-20. Harlow Promotions, Inc. sells T-shirts for concerts. The company has developed the following budget for the coming year based on a sales forecast of 80,000 T-shirts: Sales \$1,600,000 Cost of Goods Sold

### Business analysis for Barker Brothers: inventory costs, process cost system, job order

Use the following to answer questions 1-2. Barker Brothers manufactures a single product using a process involving (1) mixing ingredients and (2) a subsequent packaging operation. Barker uses a process cost system to account for the flow of costs through its production process. 1. Refer to the information above. In the pro

### Inventory cost flow assumption vs. several choices

Should International Accounting Standards provide for only one inventory cost flow assumption or should there be several choices? Carefully explain why.