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Ierofanga [76]
3 years ago
9

The Xu Corporation uses a periodic inventory system. The company has a beginning inventory of 300 units at $5 each on January 1.

Xu purchases 500 units at $4 each in February and 200 units at $6 each in March. There were no additional purchases or sales during the remainder of the year. Xu sells 300 units during the quarter. If Xu uses the LIFO method, what is its cost of goods sold?
a. $1,500
b. $1,800
c. $1,400
d. $1,600
Business
1 answer:
bogdanovich [222]3 years ago
3 0

Answer:

Cost of goods sold is d. $1,600

Explanation:

The LIFO is a method used to account value for inventory. Under the method, the last item of inventory purchased is the first one sold.

1. January 1,  Inventory 300 units, $5 per unit. Total $1,500

2. Purchasing:

In February, 500 units, $4 per unit. Total $2,000

In March,  200 units, $6 per unit. Total $1,200

The Xu Corporation uses a periodic inventory system and sells 300 units during the quarter.

Cost of goods sold = 200 x $6 + 100 x $4 = $1,200 + $400 = $1,600

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Answer:

Choosing alternative B would increase net income by $17,100

Explanation:

The analysis showing the incremental revenues,costs and net income of alternative A and B is shown below:

              Alternative A           Alternative   B     Difference between A&B

Revenues        $146,100            $185,900           $39800

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Net income      $41,700                 $58,800        $17,100

Alternative B records a higher net income compared to Alternative A,hence choosing alternative B would increase net income by $17,100

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3 years ago
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At the beginning of the year, Smith Company budgeted overhead of $129,600 as well as 13,500 direct labor hours. During the year,
andre [41]

Answer:

Part 1

$9.60

Part 2

$11,129

Part 3

Journal 1

Debit : Overheads $172,500

Credit : Equipment lease $ 6,800

Credit : Depreciation on building 19,340

Credit : Indirect labor 90,400

Credit : Utilities 14,560

Credit : Other overhead 41,400

<em>Being overheads incurred</em>

Journal 2

Debit : Work In Process $173,760

Credit : Overheads $173,760

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Part 4

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Part 5

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Explanation:

Overhead rate = Budgeted Overheads ÷ Budgeted Activity

                        = $129,600 ÷ 13,500

                        = $9.60

Total cost (Job K456)  = $2,750 + $5,355 + $3,024 = $11,129

Actual Overheads = $ 6,800 + $19,340 + $90,400 + $14,560 + $41,400 = $172,500

Applied overheads = 18,100 x $9.60 = $173,760

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Under-applied overheads are added to cost of goods sold. Therefore, adjusted cost of goods sold will be $636,860 ($635,600 + $1,260)

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Answer:

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