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Date Units Purchased Cost Per Unit January 1 10 $8.00 (Beginning inventory) January 18 50 9.00 February 20 20 11.00 March 15 10 12.00 (Ending inventory: The value of the ending inventory based on FIFO is?

a) $228.00
b) $258.00
c) $210.00
d) $192.00

1 Answer

1 vote

Final answer:

To calculate the value of the ending inventory based on FIFO, multiply the units of each purchase by their respective cost and sum them up. The correct answer is $540.00.

Step-by-step explanation:

To calculate the value of the ending inventory based on FIFO (First-In, First-Out), we need to determine the cost of the units purchased in chronological order. According to the given information, the units were purchased as follows:

  • January 1: 10 units at $8.00 per unit
  • January 18: 50 units at $9.00 per unit
  • February 20: 20 units at $11.00 per unit
  • March 15: 10 units at $12.00 per unit

Based on the FIFO method, the cost of the ending inventory is calculated by multiplying the units of each purchase by their respective cost and summing them up:

Cost of ending inventory = (10 units x $12.00) + (10 units x $11.00) + (20 units x $11.00) + (10 units x $9.00) = $120.00 + $110.00 + $220.00 + $90.00 = $540.00

Therefore, the correct answer is $540.00 (option e) for the value of the ending inventory based on FIFO.

User Russ Clark
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