Lock Security Company Updates Its Inventory Perpetually

question 137

Multiple Choice

Lock Security Company updates its inventory perpetually.The company reported a beginning inventory of $1,500.During the year,the company recorded inventory purchases of $4,500 and cost of goods sold of $5,000.What was the amount of its ending inventory?

• A) $1,000
• B) $2,500
• C) $2,600
• D) $2,700

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Definitions:

Fixed Overhead

Overhead expenses that remain constant regardless of a company's level of production or sales.

Raw Material

Basic materials used in the production process that are transformed into finished goods through manufacturing.

Fixed Overhead

Costs that do not vary with the level of production or sales, including rent, salaries, and insurance, necessary for maintaining a business’s operations.

Direct Labor-Hours

A unit of measure representing the actual hours worked by employees directly involved in the production process.