A Company Uses the Periodic Inventory System and Had the Following

question 233

Multiple Choice

A company uses the periodic inventory system and had the following activity during the current monthly period.
$$\begin{array} { | l | l | l | } \hline \text { November 1: } & \text { Beginning inventory } & 100 \text { units @ \$20 } \\\hline \text { November 5: } & \text { Purchased } & 100 \text { units @ \$22 } \\\hline \text { November 8: } & \text { Purchased } & 50 \text { units @ \$23 } \\\hline \text { November 16: } & \text { Sold } & \text { 200 units @\$45 } \\\hline \text { November 19: } & \text { Purchased } & 50 \text { units @ \$25 } \\\hline\end{array}$$
Using the weighted-average inventory method,the company's ending inventory would be:

• A) $2,000
• B) $2,200
• C) $2,250
• D) $2,400
• E) $4,400

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Definitions:

Variable Selling Expense

Costs that vary directly with the volume of sales, such as commissions or shipping fees.

Fixed Selling Expense

Expenses that remain constant regardless of the volume of goods or services sold, such as salaries and rent for the sales department.

Variable Administrative Expense

Expenses that fluctuate in total in direct proportion to changes in activity level, such as sales volume or production output.

Gross Margin

The difference between revenue and cost of goods sold, divided by revenue, expressed as a percentage. It represents the percentage of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold.