Sylvia\'s Designs Co. had the following inventory activity during April: Units U
ID: 2560396 • Letter: S
Question
Sylvia's Designs Co. had the following inventory activity during April:
Units
Unit
Cost
Beginning inventory
100
$10
Purchase (April 3)
40
12
Sale (April 10)
80
Purchase (April 18)
40
14
Purchase (April 23)
60
15
Sale (April 28)
90
Assuming Sylvia's uses a perpetual FIFO cost flow assumption, ending inventory for April would be
a.
$ 750
b.
$2,560
c.
$ 500
d.
$1,040
Units
Unit
Cost
Beginning inventory
100
$10
Purchase (April 3)
40
12
Sale (April 10)
80
Purchase (April 18)
40
14
Purchase (April 23)
60
15
Sale (April 28)
90
Explanation / Answer
Ending inventory as on April 10=(20 units@$10)+(40 units@$12)
Ending inventory as on April 28=(10 units@$14)+(60 units@$15)=$1040(D)
As per FIFO (first in first out);goods purchased first are sold off first and hence as on April 10;goods sold would consist of 80 units of beginning inventory.Similarly goods sold on April 28 would consist of 20 units of beginning inventory;40 units of April 3;30 units of April 18.
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