Nicholas Industries Had the Following Inventory Transactions Occur During 2014

question 174

Multiple Choice

Nicholas Industries had the following inventory transactions occur during 2014: $$\begin{array} { l l c c } && \text { Units } & \text { Cost/unit } \\2 / 1 / 16 & \text { Purchase } & 54 & \$ 45 \\3 / 14 / 16 & \text { Purchase } & 93 & \$ 47 \\5 / 1 / 16 & \text { Purchase } & 66 & \$ 49\end{array}$$ The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used what is the company's after-tax income using FIFO? (rounded to whole dollars)

• A) $1672
• B) $1840
• C) $2388
• D) $2628

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Definitions:

Work in Process Inventory

Goods that are in the process of being manufactured but are not yet completed.

Direct Labor Hour

A measure of the labor time directly involved in the production of goods, often used in costing and budgeting.

Standard Quantities

Standard quantities refer to the predetermined amounts of material, labor, and overhead that should be used in the production of a good or service, serving as a basis for cost control and efficiency analysis.

Standard Rates

Predetermined costs or charges used for billing, budgeting, or for setting up baseline expectations for financial performance.