A company has 150 units at $30 and 100 units at $35. If it sells 120 units using FIFO, what is the ending inventory value?
Practice Questions
1 question
Q1
A company has 150 units at $30 and 100 units at $35. If it sells 120 units using FIFO, what is the ending inventory value?
$1,050
$1,200
$1,500
$1,800
Under FIFO, the first 120 units sold are from the $30 batch (150 units), leaving 30 units at $30 and 100 units at $35. Ending inventory = (30 * $30) + (100 * $35) = $900 + $3,500 = $4,400.
Questions & Step-by-step Solutions
1 item
Q
Q: A company has 150 units at $30 and 100 units at $35. If it sells 120 units using FIFO, what is the ending inventory value?
Solution: Under FIFO, the first 120 units sold are from the $30 batch (150 units), leaving 30 units at $30 and 100 units at $35. Ending inventory = (30 * $30) + (100 * $35) = $900 + $3,500 = $4,400.
Steps: 10
Step 1: Identify the total units available for sale. The company has 150 units at $30 and 100 units at $35, which totals 250 units.
Step 2: Determine how many units are sold. The company sells 120 units.
Step 3: Apply the FIFO (First In, First Out) method. This means the first units sold are from the oldest inventory.
Step 4: Sell 120 units from the $30 batch first. Since there are 150 units at $30, all 120 units sold come from this batch.
Step 5: Calculate the remaining units in the $30 batch. After selling 120 units, there are 150 - 120 = 30 units left at $30.
Step 6: Note the remaining units in the $35 batch. There are still 100 units at $35 since none were sold from this batch.
Step 7: Calculate the ending inventory value. The ending inventory consists of 30 units at $30 and 100 units at $35.
Step 8: Calculate the value of the remaining inventory: (30 units * $30) + (100 units * $35).
Step 9: Perform the calculations: 30 * $30 = $900 and 100 * $35 = $3,500.
Step 10: Add the two values together: $900 + $3,500 = $4,400.
