*P6-9B Reliable Camera Mart sells a wide variety of special digital cameras and uses a perpetual
inventory system. On May 1, 2008, Reliable had five Model 25 digital cameras on hand at a unit cost
of $95. During May and June, the company had the following purchases and sales for this camera (all for cash):

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Instructions
(a) Determine the cost of goods sold and ending inventory under a perpetual inventory system using
(1) FIFO and (2) average cost.
(b) Prepare all required journal entries for May using (1) FIFO and (2) average cost.
(c) Calculate gross profit using (1) FIFO and (2) average cost.
(d) Which cost flow assumption produces the higher cash flow?
(e) What factors should the owner of Reliable Camera Mart consider when choosing a cost flow
assumption?

Walsh company manufactures and sells one product. the following information pertains to each of the company’s first two years of operations: variable costs per unit: manufacturing: direct materials $ 25 direct labor $ 12 variable manufacturing overhead $ 5 variable selling and administrative $ 4 fixed costs per year: fixed manufacturing overhead $ 400,000 fixed selling and administrative expenses $ 60,000 during its first year of operations, walsh produced 50,000 units and sold 40,000 units. during its second year of operations, it produced 40,000 units and sold 50,000 units. the selling price of the company’s product is $83 per unit. required: 1. assume the company uses variable costing: a. compute the unit product cost for year 1 and year 2. b. prepare an income statement for year 1 and year 2. 2. assume the company uses absorption costing: a. compute the unit product cost for year 1 and year 2. b. prepare an income statement for year 1 and year 2. 3. reconcile the difference between variable costing and absorption costing net operating income in year 1.

Which of the following statements about revision is most accurate? (a) you must compose first drafts quickly (sprint writing) and return later for editing. (b) careful writers always revise as they write. (c) revision is required for only long and complex business documents. (d) some business writers prefer to compose first drafts quickly and revise later; others prefer to revise as they go.

What would not cause duff beer’s production possibilities curve to expand in the short run? a. improved manufacturing technology b. additional resources c. increased demand