BUSINESS ADMINISTRATION
BUSINESS MATHEMATICS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The unit cost of a beginning inventory of 405 units is $15.16. The unit cost of the last 600 units is $16.81. Use FIFO to find the value of the ending inventory of 170 units.
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$3, 562.60
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$2, 577.20
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$2, 857.70
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$7, 228.30
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Explanation:
Detailed explanation-1: -To calculate FIFO (First-In, First Out) determine the cost of your oldest inventory and multiply that cost by the amount of inventory sold, whereas to calculate LIFO (Last-in, First-Out) determine the cost of your most recent inventory and multiply it by the amount of inventory sold.
Detailed explanation-2: -Inventory values can be calculated by multiplying the number of items on hand with the unit price of the items. In compliance with GAAP, inventory values are to be calculated with the lower of the market price or cost to the company.
Detailed explanation-3: -Under FIFO, it is assumed that the cost of inventory purchased first will be recognized first.
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