Inventory Management MCQs

We have prepared Inventory Management MCQs Quiz for the students of accounting and finance to help them get prepared for their exams and interviews. This multiple-choice questions quiz consists of 30 questions with 4 options each. After taking this Inventory Management Multiple Choice Questions and Answers quiz, students will be able to conduct any related exam and interview easily. If you like our quiz, please share it with your fellow students.

Inventory Management Multiple-Choice Questions and Answers

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1. Safety stock + EOQ is equal to:


2. An order size that minimizes inventory ordering and carrying costs:


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


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


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


6. Boomerang Co had 200 units in inventory at 30 November 20×1 valued at $800. During December, it made the following purchases and sales.

2/12 Purchased 1,000 @ $5.00 each
5/12 Sold 700 @ $7.50 each
12/12 Purchased 800 @ $6.20 each
15/12 Purchased 300 @ $6.60 each
21/12 Sold 400 @ $8.00 each
28.12 sold 500 @ $8.20 each

Which of the following is the inventory valuation using FIFO?


7. The following information relates to Camberwell plc’s year-end inventory of finished goods.

Direct costs of materials and labour Production overheads incurred Expected selling and distribution overheads Expected selling price
$ $ $ $
Inventories category 1 2,470 2,100 480 5,800
Inventories category 2 9,360 2,760 150 12,040
Inventories category 3 1,450 850 190 2,560
13,280 5,680 820 20,400

At what amount should finished goods inventory be stated in the company’s statement of financial position.


8. At its year-end Crpcodile plc has 6,00 items of product A, and 2,000 of product B, costing $10 and $5 respectively. The following information is available:

Product A – 500 are defective and can only be sold $8 each.

Product B – 100 are to be sold for $4.50 each with selling expenses of $1.50 each.

What figure should appear in Crocodile plc’s statement of financial position for inventory?


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

A. True

B. False

Closing inventory is a debt in the income statement.

C. True

D. False


10. Your firm values inventory using AVCO. At 1 June 20×8, there were 60 units in 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 $20.00 each.

The value of closing inventory at 30 June 20×8 was:


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