Question

Kingbird, Inc. just began business and made the following four inventory purchases in June:

June   1		171 units		$1190
June   10		228 units		1780
June   15		228 units		1920
June   28		171 units		1500
				$6390

A physical count of merchandise inventory on June 30 reveals that there are 240 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for June is

Answer 1

Under FIFO method goods purchased first are sold first.

Therefore the inventory of 240 units will be from the latest purchase

So the amount of ending inventory will be

171 units from June 28 = $1, 500

69 units from June 25 = 1,920*(69/228) = $581

Therefore the closing inventory will be

= 1,500 + 581

= $2, 081

Assume that the cost given in the question is the total cost of all the units.

If it's the per unit cost then the valuation will be

= 171*1500 + 69*1920

= 256,500 + 132,480

= $388, 980

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