Use the Information Below to Answer the Following Questions The Firm Uses the Periodic Inventory System

question 18

Multiple Choice

Use the information below to answer the following questions.
The following units of an inventory item were available for sale during the year:

$\begin{array}{ll}\text { Beginning inventory } & 10 \text { units at } \$ 55 \\\text { First purchase } & 25 \text { units at } \$ 60 \\\text { Second purchase } & 30 \text { units at } \$ 65 \\\text { Third purchase } & 15 \text { units at } \$ 70\end{array}$ The firm uses the periodic inventory system. During the year, 60 units of the item were sold.?
-The value of ending inventory using FIFO is?

• A) $1,250
• B) $1,350
• C) $1,375
• D) $1,150

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Definitions:

Utility Function

An economic model that quantifies the satisfaction or happiness a consumer receives from consuming goods and services.

Expected Utility

A theory in economics that models how agents choose among risky alternatives to maximize their satisfaction.

Income

Receipts garnered on a habitual basis as a result of engaging in work or investment.

Von Neumann-Morgenstern

A theory of expected utility which provides axioms for how rational individuals make decisions under uncertainty.