Marsh Company had 150,000 units of product A on hand at January 1, costing P21 each. Purchases of product A during the month of January were: Units Unit cost January 10 200,000 2218 250,000 23 28 100,000 24 A physical count on January 31 shows 250,000 units of product A on hand. What is the cost of the inventory on January 31 under the FIFO method?
Question
Marsh Company had 150,000 units of product A on hand at January 1, costing P21 each. Purchases of product A during the month of January were: Units Unit cost January 10 200,000 2218 250,000 23 28 100,000 24 A physical count on January 31 shows 250,000 units of product A on hand. What is the cost of the inventory on January 31 under the FIFO method?
Solution
Under the FIFO (First-In, First-Out) method, the cost of the inventory is calculated based on the assumption that the oldest inventory items are sold first.
Here's how to calculate the cost of the inventory on January 31:
-
Determine the number of units sold: Start with the initial inventory of 150,000 units, add the purchases made during January (200,000 units + 250,000 units + 100,000 units = 550,000 units), and then subtract the final inventory count on January 31 (250,000 units). This gives you a total of 450,000 units sold (700,000 units - 250,000 units = 450,000 units).
-
Calculate the cost of units sold: The first 150,000 units sold would be from the initial inventory, costing P21 each, for a total of P3,150,000 (150,000 units * P21/unit). The next 200,000 units sold would be from the January 10 purchase, costing P22 each, for a total of P4,400,000 (200,000 units * P22/unit). The remaining 100,000 units sold would be from the January 18 purchase, costing P23 each, for a total of P2,300,000 (100,000 units * P23/unit). So, the total cost of units sold is P9,850,000 (P3,150,000 + P4,400,000 + P2,300,000).
-
Calculate the cost of the remaining inventory: The remaining 150,000 units in inventory would be from the January 18 purchase (50,000 units at P23 each, for a total of P1,150,000) and the January 28 purchase (100,000 units at P24 each, for a total of P2,400,000). So, the total cost of the remaining inventory is P3,550,000 (P1,150,000 + P2,400,000).
So, under the FIFO method, the cost of the inventory on January 31 would be P3,550,000.
Similar Questions
The GMA corporation shows the following data related to an item of InventoryInventory, January 1 200 units @P50 Purchases, January 9 200 units @ P54 Purchases, January 19 100 units @ P60 Sales, January 20 380 units What value should be assigned to the Cost of Sale using FIFO?
A company's inventory records report the following in November of the current year: Date Activities Units Acquired at Cost Units Sold at RetailNovember 1 Beginning inventory 5 units @ $28 = $140 November 2 Purchase 10 units @ $30 = $300 November 8 Sales 12 units @ $62November 12 Purchase 6 units @ $33 = $198 Using the LIFO perpetual inventory method, what was the amount recorded in the cost of goods sold account for the 12 units sold?Multiple Choice$334$356$378$244$282
Periodic inventory using FIFO, LIFO, and weighted average cost methods The units of an item available for sale during the year were as follows: Date Line Item Description Units Cost per Unit Amount Jan. 1 Inventory 16 units at $34 $544 Aug. 13 Purchase 7 units at $36 252 Nov. 30 Purchase 7 units at $37 259 Available for sale 30 units $1,055 There are 18 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using the (a) first-in, first-out (FIFO) method; (b) last-in, first-out (LIFO) method; and (c) weighted average cost method (round per-unit cost to two decimal places and your final answer to the nearest whole dollar).
A company's inventory records report the following: Date Activities Units Acquired at Cost Units Sold at RetailAugust 1 Beginning inventory 15 units @ $38 = $570 August 5 Purchase 10 units @ $39 = $390 August 12 Purchase 20 units @ $40 = $800 August 15 Sales 30 units soldUsing the FIFO perpetual inventory method, what is the value of the inventory at August 15 after the sale?Multiple Choice$400$290$600$1,160$1,760
Cost of goods sold and inventory (24 marks) Rifle Co. had the following inventory information available: Date Transactions Purchases Sales Units Unit Cost Units 1 Sep Beginning inventory 300 $100 3 Sep Purchases 100 $84 5 Sep Sales 250 10 Sep Purchases 250 $80 15 Sep Sales 200 20 Sep Purchases 250 $76 28 Sep Sales 150 (Q1-A). Assume that the company uses LIFO method under the perpetual inventory system to estimate cost of goods sold, please calculate the cost of sale for the month of September
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.