Diligent Ltd Had Five Units of the Commodity Algo on Hand

question 15

Multiple Choice

Diligent Ltd had five units of the commodity Algo on hand at 1 September 2019. The following purchases and sales were made during September: What was the value of ending inventory of Algo, using the LIFO assumption in a perpetual inventory system?

• A) $1 460
• B) $1 480
• C) $1 580
• D) $2 400

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Definitions:

Quality Costs

Expenses associated with preventing, detecting, and correcting defective work, including costs of quality control measures and rework.

Direct Material Costs

The costs of raw materials or components that are directly traceable to a finished product.

Prevention Costs

Expenses incurred to prevent or minimize the number of defects in the manufacturing process.

Overapplied

A situation where the allocated overhead costs exceed the actual overhead costs incurred.