Elly Company Uses a Periodic Inventory System An End of the Month (1/31/20) Inventory Showed That 150

question 26

Multiple Choice

Elly Company uses a periodic inventory system. Details for the inventory and purchases accounts for the month of January, 2022 are as follows: $\begin{array}{llrr}&\text { Units } &\text { Per unit price } & \text { Total }\\\hline\text { Balance, } 1 / 1 / 22 &200& \$ 5.00 & \$ 1,000 \\\text { Purchase, } 1 / 15 / 22 & 100 & 5.30 & 530 \\\text { Purchase, } 1 / 28 / 22 & 100 & 5.50 & 550\end{array}$ An end of the month (1/31/20) inventory showed that 150 units were on hand. If the company uses LIFO, what is the cost of the ending inventory?

• A) $750
• B) $805
• C) $850
• D) $815

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Definitions:

Residual Income

Income that remains after all costs of capital have been deducted from net operating income, a measure of profitability.

Division

A distinct part of a larger company that operates semi-independently, typically focusing on a particular product line or market sector.

ROI Calculations

The process of determining the return on investment by dividing the net profit by the initial cost of the investment.

Margin

The difference between the selling price of a good or service and the cost of producing it, often expressed as a percentage of the selling price.