Burrito-Blast makes bean and cheese burritos that it sells to grocery stores. The burritos sell for $1 each. Burrito-Blast had beginning inventory of $20,000 on June 1 for 80,000 burritos. During June the company produced 500,000 burritos. June production costs are as follows:

- he company's June 30 ending inventory consists of 20,000 burritos. Assuming they use FIFO costing, what is the variable cost per burrito for a burrito that is manufactured in June?

Question

Burrito-Blast makes bean and cheese burritos that it sells to grocery stores. The burritos sell for $1 each. Burrito-Blast had beginning inventory of $20,000 on June 1 for 80,000 burritos. During June the company produced 500,000 burritos. June production costs are as follows:

- he company's June 30 ending inventory consists of 20,000 burritos. Assuming they use FIFO costing, what is the variable cost per burrito for a burrito that is manufactured in June?

Quizplus · Accepted Answer

FIFO (first-in, first-out) costing assumes that the first units purchased are the first units sold. Therefore, the variable cost per burrito for a burrito that is manufactured in June is the variable cost per burrito of the first burritos purchased in June. The company's June 30 ending inventory consists of 20,000 burritos, so the first burritos purchased in June are the 20,000 burritos that were purchased on June 1. The variable cost per burrito of the burritos purchased on June 1 is $0.20, so the variable cost per burrito for a burrito that is manufactured in June is $0.20.

Burrito-Blast Makes Bean and Cheese Burritos That It Sells to Grocery