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March Ltd. values its inventory using the first in, first out (FIFO) method. At 1 May...

March Ltd. values its inventory using the first in, first out (FIFO) method. At 1 May 2016 the company had 700 engines in inventory, valued at €190 each. During the year ended 30 April 2017 the following transactions took place:

2016

1 July                    Purchased        500 engines                 at €220 each

1 November       Sold                    400 engines                 for €160,000

2017

1 February             Purchased        300 engines                 at €230 each

15 April                 Sold   400 engines                 for €125,000

What is the cost of the company’s closing inventory of engines at 30 April 2017?

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Answer #1
The cost of the company's closing inventory of engines at 30 April 2017 is calculated below:
Date Transaction Number of engines Cost per engine Total cost
01-May-16 Opening inventory 700 €190 €133,000
01-Jul-16 Purchases 500 €220 €110,000
01-Nov-16 Sales -400 €190 -€76,000 400 units sold out of the opening inventory
01-Feb-17 Purchases 300 €230 €69,000
15-Apr-17 Sales -300 €190 -€57,000 300 units out of the opening inventory
15-Apr-17 Sales -100 €220 -€22,000 Balance 100 units sold out of purchases made on 1 July 2016
Cost of the company’s closing inventory of engines at 30 April 2017 €157,000
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