ReadersCom Uses a Perpetual Inventory System and Has the Following

question 61

Multiple Choice

Readers.com uses a perpetual inventory system and has the following data for the month of February: If Readers.com uses the moving average method,how much is ending inventory on February 28?
$$\begin{array} { r l r } \text { Feb. } 1 & \text { On hand, } 30 \text { units } @ \$ 5.00 \text { each } & \$ 150 \\8 & \text { Purchased 40 units } @ \$ 5.35 \text { each } & 214 \\15 & \text { Sold } 50 \text { units } & \\22 & \text { Purchased } 40 \text { units } @ \$ 5.20 \text { each } & 208 \\28 & \text { On hand, 60 units } &\end{array}$$

• A)$300
• B)$306
• C)$312
• D)$318

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Definitions:

Overhead Applied

The allocation of indirect costs, such as manufacturing overhead, to specific jobs or products based on a predetermined rate or method.

Activity-Based Costing

A cost allocation system that first identifies overhead expenses, assigns them to specific activities, and then distributes these costs to various products.

Traditional Costing Method

An accounting method that assigns indirect costs to products based on a predetermined overhead rate, often not reflecting the actual consumption of resources by each product.

Direct Labor-Hours

The total number of hours worked directly on the production of goods.