Question

The following information is available from Gamma Corp. regarding the inventory of its best-selling mesh router:...

The following information is available from Gamma Corp. regarding the inventory of its best-selling mesh router:

 Date Transaction Number of Units Cost per Unit 1/1 Beginning Inventory 290 \$ 990 4/5 Purchase 390 \$ 1,090 7/12 Purchase 490 \$ 1,190 11/3 Purchase 295 \$ 1,240

Gamma sold 1,225 mesh routers during the year.

What was ending inventory under the FIFO cost flow assumption?

Multiple Choice

• \$237,600.

• \$297,600.

• \$257,600.

• \$297,100.

 Date Transaction Number Cost per Unit Total cost of Units 1/1 Beginning Inventory 290 990 287,100 4/5 Purchase 390 1,090 425,100 7/12 Purchase 490 1,190 583,100 11/3 Purchase 295 1,240 365,800 Total cost 1,465 1,661,100

Number of units available for sale = 1,465

Number of units sold = 1,225

Ending inventory units = Number of units available for sale- Number of units sold

= 1,465-1,225

= 240 units

As per periodic FIFO method, ending inventory will consists of units purchased at the latest. Thus, ending inventory of 240 units will be from 11/3.

Cost of ending inventory = Ending inventory units x cost per unit

= 240 x 1,240

= \$297,600

Second option is correct.

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