A firm purchased 25 units of materials with a unit price of $2.00 on May 5. On May 15, the firm purchased 25 units with a unit price of $2.10. If the firm uses the FIFO method of inventory pricing, the total cost of 30 units issued on May 20 would be

Question

Quizplus · Accepted Answer

Using the FIFO method, first the cost of the 25 units purchased on May 5 ($2.00) will be accounted for and then the cost of 5 units from the May 15 purchase ($2.10). Therefore, the total cost of 30 units issued on May 20 would be (25 x $2.00) + (5 x $2.10) = $60.50. The correct answer is D.

A Firm Purchased 25 Units of Materials with a Unit