The Xu Corporation Uses a Periodic Inventory System

question 51

Multiple Choice

The Xu Corporation uses a periodic inventory system.The company has a beginning inventory of 300 units at $5 each on January 1.Xu purchases 500 units at $4 each in February and 200 units at $6 each in March.There were no additional purchases or sales during the remainder of the year.
-Use the information above to answer the following question.Xu sells 300 units during the quarter.If Xu uses the LIFO method,what is its cost of goods sold?

• A) $1,600
• B) $1,400
• C) $1,500
• D) $1,800

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Definitions:

Manufacturing Overhead

The indirect costs associated with manufacturing, not directly tied to a specific product, such as factory rent, equipment depreciation, and utilities.

Overapplied Overhead

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

Underapplied Overhead

The situation where the allocated manufacturing overhead cost is less than the actual overhead cost incurred.

Manufacturing Overhead

Covers all indirect costs associated with manufacturing a product, including expenses such as rent for the manufacturing space, utilities, and salaries for employees not directly producing goods.