Use This Inventory Information for the Month of May to Answer

question 87

Multiple Choice

Use this inventory information for the month of May to answer the following question. $$\begin{array} { r r l l } \text { May } &1& \text { Begnning inventory } & \text { 20 units @ } 76 \\& 7 & \text { Purchase } & 70 \text { units @ } \$ 80 \\&18 & \text { Sale } & 25 \text { units } \\&22 & \text { purchase } & 10 \text { units @ } \$ 88 \\&29 & \text { Sale } & 40 \text { units }\end{array}$$
Assuming that a periodic inventory system is used,what is cost of goods sold on a FIFO basis?

• A) $2,880
• B) $5,120
• C) $5,200
• D) $2,800

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Definitions:

Variable Costs

Costs that change in proportion to the level of production or sales, such as raw materials and direct labor.

Target Costing

A pricing method in which the selling price of a product is determined first, and then the target cost is calculated by subtracting the desired profit margin from the selling price.

Selling Price

The fee customers pay to acquire a product or service.

Special Order

A customer request for goods or services that are not part of a company's standard offerings, often requiring unique production or procurement efforts.