Automobile Audio has the following inventory data: $$\begin{array} { r l r }
\text { Nov. } 1 & \text { Inventory } & 30 \text { units } @ \$ 6.00 \text { each } \
8 & \text { Purchase } & 120 \text { units } @ \$ 6.45 \text { each } \
17 & \text { Purchase } & 60 \text { units } @ \$ 6.30 \text { each } \
25 & \text { Purchase } & 90 \text { units } @ \$ 6.60 \text { each }
\end{array}$$ A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand.Ending inventory under FIFO is
A)$657
B)$1269
C)$632
D)$1295

Question

Automobile Audio has the following inventory data: $$\begin{array} { r l r } 
\text { Nov. } 1 & \text { Inventory } & 30 \text { units } @ \$ 6.00 \text { each } \
8 & \text { Purchase } & 120 \text { units } @ \$ 6.45 \text { each } \
17 & \text { Purchase } & 60 \text { units } @ \$ 6.30 \text { each } \
25 & \text { Purchase } & 90 \text { units } @ \$ 6.60 \text { each }
\end{array}$$ A physical count of merchandise inventory on November 30 reveals that there are 100 units on hand.Ending inventory under FIFO is
A)$657
B)$1269
C)$632
D)$1295

Quizplus · Accepted Answer

FIFO (First-In, First-Out) assumes that the first units purchased are the first units sold. Therefore, the ending inventory consists of the units purchased on November 25 (90 units) and the remaining units from the November 17 purchase (10 units). The cost of the ending inventory is:90 units x $6.60 = $59410 units x $6.30 = $63Total cost of ending inventory = $657

Automobile Audio Has the Following Inventory Data A Physical Count of Merchandise Inventory on November 30 Reveals