Information relating to the beginning inventory and purchase of inventory by Magnesium Chemicals is as follows: The cost of 50 units in the ending inventory using the first-in, first-out method is:
$$\begin{array} { l l l }
\text { Specific Purchase } & \text { Number of Units } & \text { Cost per Unit } \
\text { Beginning inventory } & 25 & \$ 100 \
\text { First purchase } & 30 & \$ 95 \
\text { Second purchase } & 40 & \$ 105
\end{array}$$
A) $2,345.
B) $5,567.
C) $3,000.
D) $5,150.

Question

Information relating to the beginning inventory and purchase of inventory by Magnesium Chemicals is as follows: The cost of 50 units in the ending inventory using the first-in, first-out method is:
$$\begin{array} { l l l } 
\text { Specific Purchase } & \text { Number of Units } & \text { Cost per Unit } \
\text { Beginning inventory } & 25 & \$ 100 \
\text { First purchase } & 30 & \$ 95 \
\text { Second purchase } & 40 & \$ 105
\end{array}$$
A) $2,345.
B) $5,567.
C) $3,000.
D) $5,150.

Quizplus · Accepted Answer

Under the FIFO method, the ending inventory consists of the most recent purchases. Therefore, the 50 units in ending inventory would be from the second purchase (40 units at $105) and 10 units from the first purchase (10 units at $95). The calculation is: (40 units x $105) + (10 units x $95) = $4,200 + $950 = $5,150.

Information Relating to the Beginning Inventory and Purchase of Inventory