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26 July, 09:39

A firm purchased 50 units of materials with a unit price of $1.30 on June 1. On June 15, the firm purchased 50 units with a unit price of $1.20. If the firm uses the FIFO method of inventory pricing, the total cost of 65 units issued on June 20 would be

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  1. 26 July, 10:31
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    Answer: $83

    Explanation:

    Given that,

    On 1 June,

    Materials purchased = 50 units

    Unit price of material = $1.30

    On June 15,

    Materials purchased = 50 units

    Unit price of material = $1.20

    Total cost of 65 units:

    = (Material purchased on 1 June * Unit price of material) + [ (65 units - 50 units) * $1.20]

    = (50 units * $1.30) + (15 units * $1.20)

    = $65 + $18

    = $83
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