Question

XYZ Company made the following purchases and had the following sales in the month of December Date Dec. 1 Dec 3 Action Beginning Inventory Purchase Purchase Purchase Purchase TOTALS Units 12 10 8 @ @ Price $8 $14 $16 $18 $20 Dec. 8 Total $96 $140 $128 $216 $200 $780 Dec.12 Dec. 30 Dec. 31 10 @ 52 Answer the following questions related to the LIFO, FIFO, and Weighted Average cost flow assumptions: Question 1 2 pts To answer this question, include only the number. Do not include a dollar sign ($) or any spaces in your answer. If a total of 20 units were remaining in ending inventory on Dec. 31, what would be the total cost in ending inventory under the FIFO cost flow assumption?

Answer 1

Answer:

380

FIFO (first in first out) method of costing assumes that the inventory purchased first is sold first. So what remains on Dec 31 is what was purchased last.

20 units were left on Dec 31. Out of this, 10 units were purchased on Dec 30 @ $20. The remaining 10 units were purchased on Dec 12 @ $18. So,

(10 * 20 = 200) + (10 * 18 = 180)  

200 + 180 = 380

So, the total cost in ending inventory under the FIFO cost flow assumption is 380