The Inventory Record for a Particular Item for Year 2

question 6

Multiple Choice

The inventory record for a particular item for Year 2 appears below.
$\begin{array}{|l|l|l|l|}\hline \text { Inventory, January 1, Year 2 } & 20,000 & \$ 0.20 & \$ 4,000 \\\hline \text { Purchases: } & & & \\\hline \text { March 2 } & 4,000 & .24 & \$ 960 \\\hline \text { April 30 } & 3,000 & .28 & 840 \\\hline \text { June 15 } & 6,000 & .32 & 1,920 \\\hline \text { September 30 } & 2,000 & .26 & 520 \\\hline \text { December } 15 & 1.000 & .20 & 200 \\\hline \text { Total purchases } & 16.000 & & \$ 4,440 \\\hline \text { Total available for sale } & 36,000 & & \$ 8,440 \\\hline \text { Units sold } & 28,000 & & \\\hline\end{array}$ Refer to the Inventory Record example.The cost of goods sold for year 2 under FIFO is:

• A)$6,040
• B)$6,120
• C)$6,320
• D)$6,520
• E)$6,840

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Definitions:

Standard Hours

The predetermined amount of time expected to complete a task or produce a unit of product under normal conditions.

Total Standard Cost

The aggregated cost of direct materials, direct labor, and manufacturing overhead used in producing a product under standard costing.

Standard Cost

The planned cost for a unit of product or service, serving as a benchmark for evaluating performance and setting budgets.

Net Operating Income

The profit a company makes after deducting its operating expenses, without accounting for taxes and interest.