A restaurant has a beginning inventory for the month of 150 pounds of beef at $2.70 per pound. In week 1 they use 125 pounds of beef and receive 175 pounds of beef into inventory at $2.80 per pound. In week 2 they use 190 pounds of beef and receive 150 pounds of beef at a cost of $2.80 per pound. In week 3 they use 140 pounds of beef and receive 125 pounds of beef at $2.75 per pound. In week 4 they use 110 pounds of beef and receive shipment of 125 pounds of beef at $2.85 per pound. What is the cost of the inventory at the end of week 3 using the FIFO method of inventory?
For week 1 I got 557.5, week 2 529.5, and week 3 383.75
The cost of a camp is $300 for the first week and $125 for each week beyond the first.
The total cost can be modeled by the expression 300 + 125( x – 1). What does ( x – 1) represent?
To calculate the cost of the inventory at the end of week 3 using the FIFO (First-in, First-out) method, we need to track the cost of beef consumed and remaining inventory based on the order in which it was received.
Let's break it down week by week:
Week 1:
- Beginning inventory: 150 pounds of beef at $2.70 per pound
- Usage: 125 pounds
- Cost of usage: 125 pounds x $2.70 = $337.50
- Remaining inventory: 150 pounds - 125 pounds = 25 pounds
Week 2:
- Beginning inventory: 25 pounds of beef from the previous week at $2.70 per pound
- Usage: 190 pounds
- Since the remaining inventory is not sufficient to cover the usage, we need to receive more beef.
- Received inventory: 150 pounds at $2.80 per pound
- Cost of usage: 25 pounds x $2.70 + 125 pounds x $2.80 = $329.50 + $350.00 = $679.50
- Remaining inventory: 150 pounds (received) - 125 pounds (used) = 25 pounds
Week 3:
- Beginning inventory: 25 pounds of beef from the previous week at $2.80 per pound
- Usage: 140 pounds
- Since the remaining inventory is not sufficient to cover the usage, we need to receive more beef.
- Received inventory: 125 pounds at $2.75 per pound
- Cost of usage: 25 pounds x $2.80 + 125 pounds x $2.75 = $70.00 + $343.75 = $413.75
- Remaining inventory: 125 pounds (received) - 140 pounds (used) = -15 pounds (negative means shortage)
At the end of week 3, we can see that there is a shortage of 15 pounds of beef. The cost of the inventory using the FIFO method would be the cost of all the beef consumed, which is $337.50 (week 1) + $679.50 (week 2) + $413.75 (week 3) = $1,430.75.
Therefore, the cost of the inventory at the end of week 3 using the FIFO method is $1,430.75.