The Following Lots of a Particular Commodity Were Available for Sale

question 99

Multiple Choice

The following lots of a particular commodity were available for sale during the year:

The firm uses the periodic system and there are 25 units of the commodity on hand at the end of the year.
What is the amount of the inventory at the end of the year using the average cost method?

• A)$1,685
• B)$1,575
• C)$1,805
• D)$3,705

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Definitions:

Common Fixed Expenses

Expenses that remain constant regardless of the level of production or sales activities, such as rent, salaries, and insurance.

Operating Period

The span of time during which a business or a particular machinery is operational or in use.

Net Operating Income

Revenue from the primary business activities of a company, with no deductions for interest and taxes.

Variable Manufacturing Overhead

Variable manufacturing overhead refers to the manufacturing costs that vary with the level of production output, such as utilities and certain labor costs.