During June, the following changes in inventory item 27 took place: June 1 Balance 1,450 units @ $34 14 Purchased 890 units @ $55 24 Purchased 650 units @ $45 8 Sold 350 units @ $73 10 Sold 1,100 units @ $63 29 Sold 520 units @ $65 Perpetual inventories are maintained. What is the cost of the ending inventory for item 27 under the FIFO method.

Question

Business

Finn Pierce

27 March, 07:57

During June, the following changes in inventory item 27 took place: June 1 Balance 1,450 units @ $34 14 Purchased 890 units @ $55 24 Purchased 650 units @ $45 8 Sold 350 units @ $73 10 Sold 1,100 units @ $63 29 Sold 520 units @ $65 Perpetual inventories are maintained. What is the cost of the ending inventory for item 27 under the FIFO method.

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Lailah Powers · Answer 1

Opening inventory = 1,450 x $34 = 49,300

Purchases = 890 x $55 = 48,950

Purchases = 650 x $45 = 29,250

Total 2,990 127,500

Less:

Sales 350 @ $34 11,900

Sales 1,100 @ $34 37,400

Sales 520 @ $55 28,600

Closing inventory 1,020 units 49,600

Cost of ending inventory = $49,600

Explanation:

In FIFO method, socks are issued out on first come, first served basis. The 350 units that were first issued will be valued at $34 per unit, the next 1,100 units will also be valued at $34. These two issues were taken from the opening inventory and are expected to be valued at the cost of opening inventory. the next 520 units sold will be valued at $55. This issue was made from 890 units purchased after the opening inventory.