On December 31, there were 54 units remaining in ending inventory. These 54 units consisted of 11 from January, 13 from February, 6 from May, 13 from September, and 11 from November. Using the specific identification method, what is the cost of the ending inventory?

Remaining Part of the Questions

A company had the following purchases during the current year:

January 13 Units at $123

February 23 Units at $133

May 18 Units at $143

September 15 Units at $153

November 13 Units at $163

Solution

Specific Identificationi Method of Inventory Costing

This method utlizes the specific cost of each inventory batch as at the time they came in to arrive at the costs of goods sold and the closing/ending inventory. This is different from First in First Out (FIFO) that utilizes the cost of the first set of goods that came in for COGS and the Last in First Out (LIFO) that uses the cost of the last batch of goods that came in for closing inventory and COGS determination.

Cost of Closing/Ending Inventory for the Last 54 Units

11 from January = 11 x $123 = $1,353

13 from February = 13 x $133 = $1,729

6 from May = 6 x $143 = $858

13 from September = 13 x $153 = $1,989

11 from November = 10 x $163 = $1,630

Ending inventory 1353+1729+858+1989+1630 = $7,559

Note: I had to complete the question for you since the first part on the monthly cost of inventory received was missing. Therefore, if the monthly costs are inputted above is not correct, kindly replace the calculations with the right monthly costs to arrive at your ending inventory. Just follow the process.