Question

A company had the following purchases during the current year:

Jan: 10 units at $ 120

Feb: 20 units at $130

May: 15 units at $140

Sep: 12 units at $150

Nov: 10 units at $160

On December 31, there were 29 units remaining in ending inventory. These 29 units consisted of 1 from March, 6 from April, 5 from June, 9 from October, and 8 from November. Using the specific identification method, what is the cost of the ending inventory?

a. $3,500.

b. $3,800.

c. $3,960.

d. $3,280.

e. $3,640.

Answer 1

b. $3,800.00

Step-by-step explanation:

The computation of cost of the ending inventory is given below:-

Month Units Price Amount

Jan 2.00 $120.00 $240.00

Feb 4.00 $130.00 $520.00

May 6.00 $140.00 $840.00

Sept 4.00 $150.00 $600.00

Nov 10.00 $ 160.00 $1,600.00

Ending Inventory $3,800.00

So, for computing the cost of ending inventory we simply multiply units with amount of every Month.