The following lots of a particular commodity were available for sale during the year: $\begin{array}{ll}
\text { Beginning inventory } & 10 \text { units at } \$ 60 \
\text { First purchase } & 25 \text { units at } \$ 65 \
\text { Second purchase } & 30 \text { units at } \$ 68 \
\text { Third purchase } & 15 \text { units at } \$ 75
\end{array}$ The firm uses the periodic system and there are 25 units of the commodity on hand at the end of the year.
What is the amount of the inventory at the end of the year using the FIFO method?
A) $1,685
B) $1,575
C) $1,805
D) $3,585

Question

Quizplus · Accepted Answer

Under FIFO, the ending inventory consists of the most recent purchases. Therefore, the 25 units on hand are from the third purchase (15 units at $75) and part of the second purchase (10 units at $68). The calculation is: (15 units x $75) + (10 units x $68) = $1,125 + $680 = $1,805.

The Following Lots of a Particular Commodity Were Available for Sale