So California Inc

question 89

Multiple Choice

So. California Inc., through no fault of its own, lost an entire plant due to an earthquake on May 1, 2009. In preparing their insurance claim on the inventory loss, they developed the following data: Inventory January 1, 2009, $300,000; sales and purchases from January 1, 2009, to May 1, 2009, $1,300,000 and $875,000, respectively. So. California consistently reports a 40% gross profit. The estimated inventory on May 1, 2009, is:

• A)$302,500.
• B)$360,000.
• C)$395,000.
• D)$455,000.

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Definitions:

Unit Product Cost

An expression of the total production cost (materials, labor, and overhead) divided by the number of units produced.

Traditional Costing Method

An accounting strategy that allocates overhead costs to products based on a predetermined rate, without considering the actual activities that incur costs.

Unit Product Cost

The calculated expense for producing a single unit, taking into account all costs of production from raw materials to finished goods.

Unit Product Cost

The total cost, including materials, labor, and overhead, to produce a single unit of a product.