Question

The following units of an inventory item were available for sale during the year. Beginning inventory 10 units at $55 First purchase 25 units at $60 Second purchase 30 units at $65 Third purchase 15 units at $70 The firm uses the periodic inventory system. During the year, 60 units of the item were sold. The ending inventory cost using FIFO is

Answer 1

Answer:

$1,375

Explanation:

Given the information above, the Ending inventory = Units available - Units sold

Units available = 10 + 25 + 30 + 70 = 80

Units sold = 60

Ending inventory = 80 - 60

Ending inventory = 20

Cost of ending inventory under FIFO

= (15 × $70) + (20 - 15) × $65

= $1,050 + $325

= $1,375

Therefore, the ending inventory cost using FIFO is $1,375