Answer:
Zimmerman Corp
Using the FIFO method, the cost of part M.O. ending inventory at May 31, 2020 is
$47,000
Explanation:
a) Data and Calculations:
Date Items Units Unit price Total
May 1, 2020 Beginning inventory of M.O. 1,500 $21.00 $31,500
May 9 Purchases 2,000 22.00 44,000
May 17 Purchases 3,500 23.00 80,500
May 26 Purchases 1,000 24.00 24,000
Total 8,000 $180,000
May 31 Ending inventory 2,000
Valuation of ending inventory under FIFO:
Ending inventory = (1,000 * $24) + (1,000 * $23) = $47,000
Cost of goods sold = ($180,000 - $47,000) = $133,000
Under the FIFO method of inventory valuation, it is assumed that goods sold are from the ones put in store first. This means that the earlier purchased goods are sold first before the later ones. Therefore, the ending inventory is always from the inventories that are newly purchased.
