Question

A firm purchased 50 units of materials with a unit price of $1.30 on June 1. On June 15, the firm purchased 50 units with a unit price of $1.20. If the firm uses the FIFO method of inventory pricing, the total cost of 65 units issued on June 20 would be

Answer 1

Answer: $83

Explanation:

Given that,

On 1 June,

Materials purchased = 50 units

Unit price of material = $1.30

On June 15,

Materials purchased = 50 units

Unit price of material = $1.20

Total cost of 65 units:

= (Material purchased on 1 June × Unit price of material) + [(65 units - 50 units) × $1.20]

= (50 units × $1.30) + (15 units × $1.20)

= $65 + $18

= $83