Dunedin Inc

question 100

Essay

Dunedin Inc.began the month with inventory of $10,000 and then purchased inventory at a cost of $105,000.The perpetual inventory system indicates that inventory costing $94,000 was sold during the month for $141,000.An inventory count shows that inventory costing $20,100 is actually on hand at month-end.
Required:
What amount of shrinkage occurred during the month?

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Definitions:

Activity Cost Pool

A “bucket” in which costs are accumulated that relate to a single activity measure in an activity-based costing system.

Plantwide Overhead Rate

A single predetermined overhead rate that is used throughout a plant.

Activity-based Management

A management strategy that focuses on optimizing activities to improve the value received by the customer and the profit gained by providing this value.