ADM 1340 T
Quiz No. 2
STUDENT #: ____________________
1. This quiz is 30 minutes in length.
2. This is a close-book, close-notes exam.
3. Acalculator is allowed.
4. Please write or print neatly.
Statement of Academic Integrity
The School of Management does not condone academic fraud, an act by a student that may result in a false academic
evaluation of that student or of another student. Without limiting the generality of this definition, academic fraud occurs
when a student commits any of the following offences: plagiarism or cheating of any kind, use of books, notes,
mathematical tables, dictionaries or other study aid unless an explicit written note to the contrary appears on the exam,
to have in his/her possession cameras, radios (radios with head sets), tape recorders, pagers, cell phones, or any other
communication device which has not been previously authorized in writing.
Statement to be signed by the student:
I have read the text on academic integrity and I pledge not to have committed or attempted to commit academic fraud in
Note: an examination copy or booklet without that signed statement will not be graded and will receive a final exam
grade of zero. Question 1 (10 points)
Here are the inventory records of King Cie for the month of January:
Date Description Units Costs
1-Jan Beginning inventory 50 $2
5-Jan Purchase 40 $3
15-Jan Purchase 20 $5
24-Jan Sales 6
1) The 6 units sold on January 24th generated sales of $48.
1) The company has the choice between the FIFO andAverage methods to cost its
inventory. Under which of the inventory costing methods would the company
report higher retained earning? Provide a brief explanation. (5 points)
2) Under which one of the methods (FIFO andAverage) would the ending inventory
balance be the lowest? Provide a brief explanation. (5 points)
1) Since we are in a scenario where prices are increasing, the inventory costing
method that would produce the highest retained earnings would be the FIFO
method since it uses the oldest inventory first to calculate cost of goods sold
which means profits would b