Question

The inventory data for an item for November are:

Nov. 1 Inv......... 20 units at $20
4 Sold ......... 10 units
10 Purchased 30 units at $21
17 Sold........... 20 units
30 Purchased......... 10 units at $22
Using the perpetual system, costing by the first-in, first-out method, what is the cost of the merchandise inventory of 30 units on November 30?
A. $640
B. $610
C. $620
D, $630
E. None

Answer 1

The cost of the merchandise inventory of 30 units on November 30, using the perpetual system and FIFO method, is $610.

Step-by-step explanation:

In the perpetual system, costing by the first-in, first-out (FIFO) method, the cost of the merchandise inventory of 30 units on November 30 can be calculated by considering the order of purchase and sale of the units. According to the given data, the inventory on November 1 had 20 units at $20 each, and on November 10, 30 units were purchased at $21 each. Therefore, the cost of the merchandise inventory on November 30 would be:

1. First, allocate the units from the November 1 inventory: 20 units x $20 = $400
2. Allocate the remaining 10 units from the November 10 purchase: 10 units x $21 = $210
3. The total cost of the merchandise inventory of 30 units on November 30 would be $400 + $210 = $610

Therefore, the correct answer is B. $610.