A Company Had the Following Purchases and Sales During Its

question 153

Multiple Choice

A company had the following purchases and sales during its first year of operations: On December 31,there were 26 units remaining in ending inventory.Using the Periodic FIFO inventory valuation method,what is the cost of the ending inventory? (Assume all sales were made on the last day of the month.)

• A)$3,405.
• B)$3,200.
• C)$3,445.
• D)$3,540.
• E)$3,270.

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Definitions:

Equivalent Units

A concept used in process costing that converts partially completed units into a number of fully completed units for accounting purposes.

Conversion Costs

Conversion costs are the combined costs of direct labor and factory overhead incurred to convert raw materials into finished goods.

FIFO Method

An inventory valuation method where the first goods purchased or produced are the first ones removed from inventory and sold, standing for "first-in, first-out."

Equivalent Unit

An equivalent unit measures a portion of completed goods in terms of an equal number of fully completed units, used in cost accounting to assess production and inventory.