Question

Bailey Company uses a periodic inventory system and its inventory records contain the following information: Units Total Cost Beginning Inventory: 300 $780 Purchased on May 10 400 1,170 Purchased on June 15 500 1,260 Purchased on August 28 300 990 1,500 $4,200 The company sold 1,000 units during June. There were no additional purchases or sales during the remainder of the year. The company had 500 units were in its ending inventory at the end of the year. Use the information above to answer the following question. If Bailey Company uses the FIFO costing method, what is the cost of its ending inventory

Answer 1

Answer:

Ending inventory cost= $1,494

Explanation:

Giving the following information:

Beginning Inventory: 300 $780

Purchases:

May 10: 400 units for $1,170

June 15: 500 units for $1,260 ($2.52 per unit)

August 28: 300 units for  $990 ($3.3 per unit)

The company had 500 units were in its ending inventory at the end of the year.

Under FIFO (first-in, first-out), the ending inventory cost is calculated using the cost of the last units incorporated.

Ending inventory cost= 300*3.3 + 200*2.52= $1,494