The Goods in Process Inventory Account for the AB Corp

question 83

Multiple Choice

The Goods in Process Inventory account for the AB Corp.follows:
$$\begin{array}{l}\text { Goods in Process Inventory }\\\begin{array} { l r | r l } \hline \text { Beginning balance } & 4,500 & & \\\text { Direct materials } & 47,100 & & \\\text { Direct labor } & 29,600 & ? & \text { Finished goods } \\\text { Applied overhead } & 15,800 & & \\\text { Ending balance } & 8,900 &\end{array}\end{array}$$


The cost of units transferred to finished goods is:

• A) $97,000
• B) $105,900
• C) $88,100
• D) $95,200
• E) $92,500

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Definitions:

Consignment

A business arrangement in which goods are left in the possession of another party to sell, but ownership remains with the supplier until the goods are sold.

Inventory Items

Goods and materials that a business holds for the ultimate goal of resale or production in the course of operations.

LIFO Method

An inventory valuation method that assumes the last items placed in inventory are the first ones sold; LIFO stands for Last-In, First-Out.

FIFO Method

First In, First Out, an inventory valuation method that assumes that the first items placed into inventory are the first sold.