Biscuit Bakery had the following activity in its inventory account during August 20X3. $\begin{array}{lllcc}
\text { Date } & \text { Activity } & \text { Units } & \begin{array}{c}
\text { Cost per } \
\text { Unit Cost }
\end{array} & \text { Total } \
\hline \text { August 1 } & \text { Beginning inventory } & 100 & \$ 3.00 & \$ 300 \
\text { August 3 } & \text { Purchase } & 40 & 3.10 & 124 \
\text { August 7 } & \text { Sale } & 50 & & \
\text { August 12 } & \text { Purchase } & 50 & 3.20 & 160 \
\text { August 16 } & \text { Sale } & 70 & & \
\text { August 23 } & \text { Sale } & 40 & & \
\text { August 30 } & \text { Purchase } & 60 & 3.30 & 198
\end{array}$ What is the ending inventory balance at August 31,20X3,for Biscuit Bakery if the company uses perpetual FIFO as its inventory valuation method?
A)$198.00
B)$270.00
C)$294.00
D)$297.50
E)$358.00

Question

Quizplus · Accepted Answer

Using perpetual FIFO method means that the oldest units are sold first. Applying the FIFO method to the above table of activity gives the following:
- The 100 units from the beginning inventory are sold first for a total cost of $300.
- Out of the 40 units purchased on August 3, the remaining 40 units are in the inventory at a cost of $3.10 per unit. Total cost is $124.
- Out of the 50 units purchased on August 12, the remaining 50 units are in the inventory at a cost of $3.20 per unit. Total cost is $160.
- Out of the 60 units purchased on August 30, the remaining 40 units are in the inventory at a cost of $3.30 per unit. Total cost is $132.
Therefore, the ending inventory would be 40 units x $3.30 per unit = $132. Answer choice C is closest to this value.

Biscuit Bakery Had the Following Activity in Its Inventory Account