A firm that sells a single product had a beginning inventory of 4,000 units with a total cost of $28,000. Early in the year, 10,000 units were purchased at $9 each. Using FIFO, what is the value of the ending inventory of 3,000 units?

Question

Business

Chaos

7 March, 14:50

A firm that sells a single product had a beginning inventory of 4,000 units with a total cost of $28,000. Early in the year, 10,000 units were purchased at $9 each. Using FIFO, what is the value of the ending inventory of 3,000 units?

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Answers (1)

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Jonathan Ferrell · Answer 1

Ending inventory = $27,000

Explanation:

Giving the following information:

A firm that sells a single product had a beginning inventory of 4,000 units with a total cost of $28,000. Early in the year, 10,000 units were purchased at $9 each.

First, we need to calculate the unitary value of the beginning inventory:

Beginning inventory = 28,000/4,000 = $7 per unit

FIFO (first-in, first-out)

The last units that are left have a value of $9 each.

Ending inventory = 3,000*9 = $27,000