Question

The inventory data for an item for November are: Nov. 1 Inventory 20 units at $20 4 Sold 10 units 10 Purchased 30 units at $21 17 Sold 20 units 30 Purchased 5 units at $22 Using the perpetual system, costing by the first-in, first-out method (FIFO), what is the cost of the merchandise inventory of 25 units on November 30?

Answer 1

Answer: $530

Explanation:

In the FIFO inventory method, the first purchased inventory is the first to be sold.

A total of 55 inventory was purchased and a total of 30 was sold off. The 30 inventories sold would be taken from the first purchased inventories which are the 20 and 30 purchased on the 1st and 10th of November respectively. The cost of the 25 inventories would be the cost of purchasing the inventory bought on the 10th and 30th of November.

The cost of the 25 inventories :

20 × $21 = $420

5 × $22 = $110

= $530