Question1 Skyland Company wants an ending inventory each month equal to 30% of t

Question

Question1

Skyland Company wants an ending inventory each month equal to 30% of that month's cost of goods sold. Cost of goods sold for February is projected at $90,000. Ending inventory at the end of January was $24,000. Based on this information, purchases for February would be:

A. $87,000.

B. $63,000.

C. $66,000.

D. $93,000.

Question 2

Hansen Company provided the following selected information about its consumer products division for 2012:

Based on this information, the division's investment amount (amount of operating assets) was

A. $580,000.

B. $2,000,000.

C. $2,580,000.

D. $4,580,000.

Explanation / Answer

Question1 D. $93000

   Note:- Purchase = cost of goods sold - opening inventory + closing inventory

   = $90000 - $24000 + (30% * $90000)

= $90000 - $24000 + $27000

= $93000

Question 2 C. $2580000

Note:-      ROI = net income / investment

0.09 = $232200 / Investment

Investment = $2580000

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