A Company Has Inventory of 10 Units at a Cost

question 136

Multiple Choice

A company has inventory of 10 units at a cost of $10 each on June 1. On June 3, they purchased 20 units at $12 each. 12 units are sold on June 5. Using the FIFO periodic inventory method, what is the cost 18 units remaining in ending Inventory after the June 5 sale?

• A)$196
• B)$124
• C)$104
• D)$144
• E)$216

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Definitions:

Direct Labor Costs

Expenses associated with the wages and benefits of employees who directly work on the production of goods.

Cash Account

An account that tracks the amount of cash available to a business or individual.

Raw Materials Inventory

The total cost of all the materials kept in stock that have not yet been used in manufacturing.

Net Operating Income

The total profit of a company after operating expenses are subtracted from operating revenues but before deducting taxes and interest.