Question

question content area the following lots of commodity z were available for sale during the year. beginning inventory 12 units at $48 first purchase 18 units at $50 second purchase 21 units at $56 third purchase 15 units at $61 the firm uses the periodic system, and there are 25 units of the commodity on hand at the end of the year. what is the ending inventory balance at the end of the year according to the fifo method? a. $1,475 b. $1,200 c. $3,567 d. $3,542

Answer 1

The ending inventory balance at the end of the year according to the FIFO method is $1,475, calculated by summing up the value of the latest purchases until the 25 units on hand are accounted for. Therefore, the correct option is a. $1,475.

Step-by-step explanation:

The student's question pertains to calculating the ending inventory balance using the FIFO (First In, First Out) inventory valuation method. To determine the ending inventory according to FIFO, we would start by taking the latest purchases until we have accounted for the 25 units on hand at the end of the year:

• 15 units at $61 = $915
• 10 units from the second purchase at $56 = $560

This gives us a total ending inventory balance of 15 units at $61 plus 10 units at $56, which equals $915 + $560, totaling $1,475.