A Company Has Inventory of 10 Units at a Cost

question 27

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 perpetual inventory method, what is the cost of the 12 units that were sold?

• A)$120
• B)$124
• C)$128
• D)$130
• E)$140

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Definitions:

Planning Period

The length of time for which an organization prepares its strategies and allocates its resources.

Bottom-Up Plan

A planning strategy that starts at the lowest or most detailed level, with information and forecasts moving upwards for review and decision-making.

Lower Management

The lowest level of management in an organizational hierarchy responsible for supervising the daily operations and reporting to middle management.

Middle Management

Middle management refers to the level of management in an organization that serves as the intermediary between the executive leadership and the operational staff, responsible for implementing strategies and policies.