Lenco Industries has cost of goods manufactured of $65 000 in May. The finished goods inventory at the end of May was $20 000 and the cost of goods sold during May was $75 000. The inventory in finished goods at the beginning of May was: $5000. $30 000. $10 000. $20 000

1. First let us calculate the difference between the cost of goods sold and the cost of goods manufactured, in order to determine the goods from alternative sources order than manufacturing. This is done as follows:

Goods from sources other than manufacturing = (sales) - (manufactured goods)

Goods from sources other than manufacturing = 75,000 - 65,000 = $10,000

This means that out of the $75,000 worth of goods sold, $10,000 was from a source other than manufacturing which can be accurately predicted to be the beginning inventory

2. Next, to calculate the total beginning inventory, we will add the goods sold from the beginning inventory and the ending inventory.

Beginning inventory = (Goods from sources other than manufacturing ) + ending inventory

Beginning inventory = 10,000 + 20,000 = $30,000

Note, since the sales are more than the manufactured goods, the excess is from beginning inventory