Alphabet Company,which Uses the Periodic Inventory Method,purchases Different Letters for Resale.Alphabet

question 46

Multiple Choice

Alphabet Company,which uses the periodic inventory method,purchases different letters for resale.Alphabet had no beginning inventory.It purchased A thru G in January at $4 per letter.In February,it purchased H thru L at $6 per letter.It purchased M thru R in March at $7 per letter.It sold A,D,E,H,J and N in October.There were no additional purchases or sales during the remainder of the year. If Alphabet Company uses the FIFO method,what is the cost of its ending inventory?

• A)$24
• B)$42
• C)$58
• D)$76

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Definitions:

Security Market Line

A graphical representation of the expected return on investments as a function of their risk, illustrating the capital asset pricing model.

Market Risk Premium

The extra return investors expect to earn from holding a risky market portfolio instead of risk-free assets.

Diversification

An investment strategy that involves spreading out investments across various financial instruments, industries, and other categories to reduce risk.

Fundamentally Different Industries

are industries that vary greatly in their nature, operations, market dynamics, and regulatory environments.