Question

A physical count of merchandise inventory on July 30 reveals that there are 170 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for July is

Answer 1

Answer: $3,502

Explanation:

When using FIFO, It means that the earliest goods were sold first which means that the later goods would be the ones in the ending inventory.

The 170 units on hand would therefore include:

• The 51 units which cost $22
• (170 - 51) units which cost $20

Ending inventory = (22 * 51) + ((170 - 51) * 20)

= 1,122 + (119 * 20)

= 1,122 + 2,380

= $3,502