Question

Ayayai Corp. just began business and made the following four inventory purchases in June: June 1 195 units $1170 June 10 260 units 1820 June 15 260 units 2080 June 28 195 units 1755 $6825 A physical count of merchandise inventory on June 30 reveals that there are 260 units on hand. Using the FIFO inventory method, the amount allocated to ending inventory for June is $2275. $1561. $1625. $2340.

Answer 1

Answer:

$2275

Explanation:

Given: Detail of inventory purchase-

          June 1   195 units at $1170

         June 10   260 units at $1820

         June 15   260 units at $2080

         June 28    195 units at $1755

         Total purchase= $6825.

Ending Inventory on June 30 are 260 units

Now, computing amount allocated to ending inventory for June by using FIFO inventory method.

First allocating inventory June 28 purchase as it is a latest entry in the books and we are using FIFO method.

∴ Inventory allocated on June 28= 195 units at the total cost of $\ 1755$

Next, allocating remaining inventory from June 15 purchase.

⇒ Remaining units= $260-195= 65\ units$

∴ Remaining units to be allocated is 65 units

Cost of each unit from the purchase of June 15.

Cost of each unit= $\frac{2080}{260}$

∴ Cost of each unit for allocating remaining units= $\ 8$

Hence, Cost of allocating remianing 65 units= $65\times \ 8 = \ 520$

Total amount allocated to ending inventory= $\ 1755+\ 520$

∴ Total amount allocated to ending inventory= $2275

Hence, the amount allocated to ending inventory for June is $2275.