A company purchases and sells Roofoo.It began last year with five units of Roofoo on hand at a cost of $10 each,and during the year its purchases and sales were as follows:
- What was the value of the ending inventory of Roofoo,using the FIFO assumption?

Question

A company purchases and sells Roofoo.It began last year with five units of Roofoo on hand at a cost of $10 each,and during the year its purchases and sales were as follows: 
- What was the value of the ending inventory of Roofoo,using the FIFO assumption?

Quizplus · Accepted Answer

Using the FIFO assumption, we assume that the oldest inventory is sold first. So, the cost of the ending inventory will be the cost of the last units purchased.

In this case, the company purchased 7 units for $15 each and then 4 units for $18 each, making the cost of the last 4 units $18 each.

The value of the ending inventory would then be:
4 units x $18 = $72

Subtracting this from the cost of goods available for sale gives us the cost of goods sold:
($10 x 5) + (7 x $15) + (4 x $18) = $5 + $105 + $72 = $182

Therefore, the answer is C) $45.

A Company Purchases and Sells Roofoo