Question

1200 units of product X 12,500 Insurance cost during transit of purchased goods 200 Freight-in 350 Cost of labor to bring product X to saleable condition 3,200 Total 16,250 None of the inventory was sold during the period. What will be the ending balance in Pete Co.’s inventory?

Answer 1

Answer:

The ending balance in Pete Co.’s inventory is $16,250

Explanation:

The ending inventory is that inventory that is available for sale in the market. The recording of the inventory is done based on cost or market value whichever is lower.

The computation of the ending inventory would be equal to

= Product cost + insurance cost + freight-in cost + cost of labor  

= $12,500 + $200 + $350 + $3,200

= $16,250

Thus, the ending inventory involve all types of cost which is used for production, selling, transporting of the inventory to the final consumer.