Bailey Company Uses a Periodic Inventory System and Its Inventory

question 163

Multiple Choice

Bailey Company uses a periodic inventory system and its inventory records contain the following information:

The company sold 1,000 units during June.There were no additional purchases or sales during the remainder of the year.The company had 500 units were in its ending inventory at the end of the year.
-Use the information above to answer the following question.If Bailey Company uses the LIFO costing method,what is the cost of its ending inventory?

• A) $1,365
• B) $1,494
• C) $1,620
• D) $2,835

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Definitions:

Direct Labor

The wages and benefits paid to employees who are directly involved in the production of goods or services.

Overhead Costs

Indirect costs or expenses related to the operation of a business that are not directly tied to a specific product or service, such as utilities, rent, and administrative expenses.

Work in Process

Work in process (WIP) refers to the materials and labor that are in the process of being manufactured but are not yet completed goods.

Selling Expenses

Costs incurred directly from the selling of goods or services, including advertising, sales commissions, and store displays.