For the current month, the beginning inventory of Elipresse Inc.consisted of 3 units that cost CHF6,500 each.During the month, the company made two purchases: 4 units at CHF6,800 each and 1 units at CHF6,750.Elipresse sold 5 units during the month.If Elipresse uses specific identification and wishes to maximize net income, the units costs allocated to cost of goods sold will be:

Question

Quizplus · Accepted Answer

Using the specific identification method, the cost of goods sold would be allocated to the specific units sold. In this case, Elipresse sold 5 units, so the cost of goods sold would be allocated to those 5 specific units.

The beginning inventory consisted of 3 units at CHF6,500 each, so the cost of goods sold would include those 3 units. Elipresse also purchased 4 units at CHF6,800 each and 1 unit at CHF6,750, so those would be the remaining units included in the cost of goods sold.

Therefore, the cost of goods sold would consist of: 
- 3 units @ CHF6,500 each 
- 1 unit @ CHF6,750 
- 1 unit @ CHF6,800

This totals to CHF34,050 in cost of goods sold.

Option D is the only choice that includes these specific units and therefore maximizes net income.

For the Current Month, the Beginning Inventory of Elipresse Inc @CHF,800 @ \mathrm{CHF}, 800 @CHF,800

For the Current Month, the Beginning Inventory of Elipresse Inc $@ \mathrm{CHF}, 800$