Question

Otis Corp. uses a periodic system and the FIFO method. Otis had beginning inventory of 30 units purchased at $120 each and made the following purchases during the year: Jan. 15: 34 units at $110 May 30: 61 units at $84 Oct. 20: 160 units at $60 Sales during the year totaled 271 units. What is the cost of ending inventory

Answer 1

the cost of ending inventory is $840

Step-by-step explanation:

The computation of the cost of ending inventory is shown below:

Total units available for sale is

= (30 units + 34 units + 61 units + 160 units)

= 285 units

And,

Sales units = 271 units

So,

Ending inventory units is

= 285 units - 271 units

= 14 units

Finally

Ending inventory cost is

= 14 units × $60

= $840

hence, the cost of ending inventory is $840