Inventory Management - MCQs

Written by True Tamplin, BSc, CEPF®

Reviewed by Subject Matter Experts

Updated on March 26, 2023

Take this quick test on inventory management to help you prepare for your exams and interviews. This test is especially useful for accounting and finance students.

The multiple choice question (MCQ) quiz has 10 questions with 4 potential answers each. Once you complete this short quiz, you should be able to perform well in any related exam or interview.

1. Safety stock + EOQ is equal to:
2. The name for an order size that minimizes inventory ordering and carrying costs is:
3. Which one of the following is not an ordering cost?
4. Which one of the following is not a carrying cost?
5. Extra inventory carried to serve as insurance against fluctuations in demand is called:
6. Boomerang Ltd. had 200 units in its inventory on 30 November valued at $800. In December, it made the purchases and sales shown in the table below.
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
Using FIFO, which of the following is the inventory valuation?
7. The following information relates to Camberwell's year-end inventory of finished goods.
Direct costs of materials and labor 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 the finished goods inventory be stated in the company\'s statement of financial position?
8. At its year-end, Crocodile Ltd. has 600 items of product A and 2,000 of product B, costing $10 and $5, respectively. The following information is available: 500 items of product A are defective and can only be sold at $8 each; 100 items of product B are to be sold for $4.50 each with selling expenses of $1.50 each. What figure should appear in Crocodile's statement of financial position for the inventory?
9. In a period of rising prices, the FIFO method of charging inventory issues to production will show a lower gross profit figure compared to the AVCO method. A. True B. False Closing inventory is a debt in the income statement. C. True D. False
10. Your firm's inventory valuation method is AVCO. On 1 June, there were 60 units in the 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 each. What is the value of the closing inventory on 30 June?

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About the Author

True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website or view his author profiles on Amazon, Nasdaq and Forbes.