Question

Nicole's Getaway Spa (NGS) uses a perpetual inventory system to keep track of its inventory. On December 31 of last year, NGS had 20 units at a total cost of 5.20 per unit. In February, Nicole purchased 40 more units at7.20 per unit. In March, Nicole purchased 15 units at 9.20 per unit. In May, 60 units were purchased at9.00 per unit. In June, NGS sold 60 units at a selling price of 11.20 per unit and 55 units at11.80 per unit. What is the total cost of the inventory on June 30?

1) $1,032
2) $1,080
3) $1,120
4) $1,176

Answer 1

The total cost of inventory on June 30 after calculations is $890, not matching any of the provided options. This suggests there may be an error in the question or the options presented.

Step-by-step explanation:

The total cost of the inventory for Nicole's Getaway Spa (NGS) on June 30 is calculated by first determining the cost of goods sold (COGS) and then subtracting that from the total cost of all inventory purchased up to that date. Given the information, we start by calculating the inventory available before the sale:

• Beginning inventory: 20 units at $5.20 each = $104
• February purchase: 40 units at $7.20 each = $288
• March purchase: 15 units at $9.20 each = $138
• May purchase: 60 units at $9.00 each = $540

Before the sales in June, the total cost of the inventory is:

$104 + $288 + $138 + $540 = $1,070

In June, NGS sold 60 units + 55 units = 115 units. After these sales, we need to calculate the remaining units:

20 + 40 + 15 + 60 - 115 = 20 units

Assuming first-in, first-out (FIFO) accounting, the last units purchased were at $9.00 each:

20 units at $9.00 = $180

Therefore, the total cost of the inventory on June 30 would be:

$1,070 - $180 = $890

This value does not match any of the options provided, indicating a possible error with the answer choices or the initial question information. However, this is how you would calculate the cost of inventory using a perpetual inventory system.