Sales during the year were 500 units.Beginning inventory was 250 units at a cost of $5 per unit.Purchase 1 was 400 units at $6 per unit.Purchase 2 was 200 units at $7 per unit. Ending inventory under the FIFO cost flow assumption (using a periodic inventory system)was:

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) cost flow assumption assumes that the first units purchased are the first units sold. Therefore, the ending inventory consists of the most recent purchases. In this case, the ending inventory consists of 200 units from Purchase 2 at $7 per unit, totaling $1,400, and 50 units from Purchase 1 at $6 per unit, totaling $300. The total ending inventory under FIFO is $1,400 + $300 = $1,700.

Sales During the Year Were 500 Units