Question

A bakery receives 200 loaves of bread each day of the week. The table below

displays how much it spent each day last week. The bakery uses FIFO. If it
had 150 loaves of bread left on Friday afternoon, what was the current value
of its stock?
Day
Monday
Tuesday
Wednesday
Thursday
Friday
Price
$175
$200
$225
$250
$300
O A. $300
B. $250
C. $175
D. $225

Answer 1

The current value of the bakery's stock can be calculated using the FIFO method, by multiplying the number of remaining loaves by the price per loaf.

Step-by-step explanation:

The current value of the stock can be determined by calculating the cost of the remaining loaves of bread. Since the bakery uses the FIFO (first-in, first-out) method, we can assume that the 150 loaves of bread left on Friday afternoon were the ones received on Monday. To calculate the cost, we multiply the number of loaves by the price per loaf. In this case, the price on Monday was $175, so the current value of the stock is 150 x $175 = $26,250.

Answer 2

1. The current value of the bakery's stock, based on FIFO (First In, First Out), is $250.

Step-by-step explanation:

The FIFO method assumes that the oldest inventory is used or sold first. In this case, since the bakery had 150 loaves left on Friday afternoon, we need to consider the cost of the loaves from the beginning of the week until we reach the quantity of 150.

Calculating the cost, we add the prices for Monday, Tuesday, and Wednesday:

`\[ \$175 + \$200 + \$225 = \$600 \]`

As the bakery had 200 loaves each day, the cost per loaf is
`\(\frac{\$600}{600 \text{ loaves}} = \$1\)` per loaf. Therefore, for the remaining 150 loaves on Friday, the value is
`\(150 * \$1 = \$150\).`Adding this to the cost of the first three days, the total value is
`\( \$600 + \$150 = \$750\).` However, since the remaining 50 loaves on Friday were bought at the price of $300, the additional cost is
`\(50 * \$300 = \$15,000\)`. Therefore, the total value of the stock is
`\( \$750 + \$15,000 = \$15,750\).`

In summary, the current value of the bakery's stock using FIFO is $15,750.