Answer:
Total value of closing inventory = $1,302
Explanation:
Units sold = opening inventory + purchases - closing inventory
= 300 + (150 + 150) -240 = 360 units
Cost of units sold
The units of 360 sold are assumed to have sold in the following order
First 300 at $5 opening inventory
Next 60 at $ 5.30 from the batch of 150 units
360
Value of inventory
Therefore the closing inventory of 240 units are valued as follows
90 × $5.3 = 477 from the balance of 90from the first batch i.e (150-60)
150 × $5.50 = 825 from the last batch
Total value of closing inventory = 477 + 825 = $1,302
Answer:
$1,302
Explanation:
FIFO is an inventory valuation method in which the date of purchase of an item of inventory is key to the selection of that item for sale. FIFO means First in First out and is a system mostly adopted for items with expiry date.
It is a system that allows inventory items bought first to be sold before inventory items purchased subsequently.
Given;
Units Per unit price Total Balance
1/1/2022 300 $5.00 $1500
Purchase, 1/15/2022 150 $5.30 $795
Purchase, 1/28/2022 150 $5.50 $825
Total 600
This means that units sold = 600 - 240
= 360
This 360 units sold must have included 300 units from 1/1/2020 and 60 units from the purchase on 1/15/2022.
Thus the balance of 240 units includes 90 units from purchases made on 1/15/2022 and the Purchase made on 1/28/2022. The value of the ending inventory
= ($5.30 * 90) + ($5.50 * 150)
= $1,302
