Question

The Light Source made the following purchases of a candle holders during the year: 15 at $8.50 each, 25 at $9.25 each, 15 at $11.25 each, and 35 at $7.55 each.
An inventory shows that 38 candle holders remain.
Find the value of the inventory using the FIFO method.

Answer 1

Answer:

The value of ending inventory = $298 (Using FIFO method)

Explanation:

First-in, First-out method depicts that the oldest purchased items will be sold first.

Ending Inventory:

As the company has 38 candle holders at the end of the period, the value of the inventory using the FIFO method is as follows:

Ending inventory will be the last purchase of 35 candle holders at the cost of $7.55 + 3 candle holders at the cost of $11.25

The value of ending inventory = (35 units × $7.55) + (3 units × $11.25)

Therefore, The value of ending inventory = $264.25 + $33.75

Hence, The value of ending inventory = $298.