Answer:
First sale = $34720
Second sale = $29760
Third sale = $14880
Inventory balance after 1st sale = $366480
Inventory balance after 2nd sale = $346720
Inventory balance after 3rd sale = $331840
Explanation:
Under the FIFO method of inventory measurement, inventory that arrives and/or is purchased in the beginning should be sold first, which means the latest inventory is kept therefore the cost of ending inventory under FIFO is greater than other inventory measurement methods due to latest prices which keep increasing as a result of inflation.
1120 units of inventory is sold first on May 12, the inventory is sold from the inventory of May 10, the cost of this sale is as follows:
First sale =1120 × $31
First sale = $34720
From the opening inventory 10480 units are left (11600-1120).
Inventory balance = (10480 ×$31) + (800×$33) + (720 ×$35)
Inventory balance = $366480
The second sale is of 960 units on May 14.
(Note: under FIFO until initial units are fully sold no later inventory is sold before them).
Second sale = 960 × $31
Second sale = $29760
Inventory balance = {9520×$31)} + (800×$33) + (720 ×$35)
Inventory balance = $346720
The third sale is of 480 units on May 31.
Third sale = 480 × $31
Third sale = $14880
Inventory balance = {9040×$31)} + (800×$33) + (720 ×$35)
Inventory balance = $331840
