Use This Information to Answer the Following Question A Periodic Inventory System Is Used

question 129

Multiple Choice

Use this information to answer the following question. $\begin{array}{llll}\text { Feb. } & 1 & \text { Inventory } & 200 \text { units @ } \$ 6.00 \\& 6 & \text { Purchase } & 300 \text { units } @ \$ 6.60\\&13 & \text { Purchase } & 100 \text { units } @ \$ 7.20 \\&20 & \text { Purchase } & 200 \text { units } @ \$ 7.80 \\&25 & \text { Purchase } & 40 \text { units @ } \$ 8.40 \\&&\text { Total sales }& 620 \text { units }\end{array}$
A periodic inventory system is used.
Using the average-cost method,the cost assigned to ending inventory is

• A) $4,278.
• B) $1,518.
• C) $1,692.
• D) $1,584.

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Definitions:

Transfer Price

The price at which goods and services are traded between departments or subsidiaries within the same company, used for accounting and tax purposes.

Applied Fixed Overhead

Costs for fixed overhead (such as rent, salaries, and utilities) that are allocated to goods produced based on a predetermined rate.

Full Capacity

The maximum level of output that a company can sustain over a period of time using its current resources, without compromising quality or efficiency.

Cost-Based Transfer Prices

Pricing methods for transactions within an organization based on the costs incurred in producing or acquiring the transferred goods or services.