Toyland's inventory records show the following data at January 31: At January 31, 210 units are still on hand. What is the value of the ending inventory at January 31 if Toyland uses the FIFO method?

Question

Toyland's inventory records show the following data at January 31:  At January 31, 210 units are still on hand. What is the value of the ending inventory at January 31 if Toyland uses the FIFO method?

Quizplus · Accepted Answer

To calculate the value of the ending inventory using FIFO method, we assume that the first units purchased are the first ones sold. 
Thus, we need to use the unit cost of the earliest purchases still on hand.
As per the given data, the following purchases were made:
- On January 14: 50 units at $10 each
- On January 23: 100 units at $12 each
- On January 27: 60 units at $11 each

Out of these, the first 50 units purchased on January 14 are all sold, leaving 50 units of the January 23 purchase and 60 units of the January 27 purchase as the ending inventory on January 31.

To calculate the value of ending inventory, we need to use the unit cost of the earliest purchase still on hand, which is $12 for the January 23 purchase.

Value of ending inventory = Number of units still on hand * Unit cost of earliest purchase still on hand
Value of ending inventory = 50 * $12 = $600

Therefore, the correct answer is C) $2,210.

Toyland's Inventory Records Show the Following Data at January 31