Sara is the manager of The Candle Shop She uses the FIFO method of inventory pricing, what is the dollar value of the ending inventory if there were 17,000 units on hand Dec 31
Jan 1 5,000 @ $0.89
Feb15 10,000 @ $0 69
April 15 2,000 @$1.09
July 15 4,000 $0.99
Oct 15 1,000 1.19
Dec 15 2,000 $1.09
ok this what I got so far
5,000 x $0.89 = 4450
10,000 x $0.69 = 6900
2,000 x $1.09 = 2180
4,000 x $0.99 = 3960
1,000 x $1.19 = 1190
2,000 x $1.09 = 2180
+-------
20860
any help would be great thanks I am stuck thanks again
To find the ending inventory value using the FIFO method, you need to consider the units sold throughout the year and the remaining units on hand at the end of the year.
Let's calculate:
1. Units sold before Dec 31:
- For Jan 1: 5,000 units were purchased at $0.89 each, so the total cost is 5,000 x $0.89 = $4,450.
- For Feb 15: 10,000 units were purchased at $0.69 each, so the total cost is 10,000 x $0.69 = $6,900.
- For April 15: 2,000 units were purchased at $1.09 each, so the total cost is 2,000 x $1.09 = $2,180.
- For July 15: 4,000 units were purchased at $0.99 each, so the total cost is 4,000 x $0.99 = $3,960.
- For Oct 15: 1,000 units were purchased at $1.19 each, so the total cost is 1,000 x $1.19 = $1,190.
- For Dec 15: 2,000 units were purchased at $1.09 each, so the total cost is 2,000 x $1.09 = $2,180.
Add all of these costs together to calculate the cost of the units sold before Dec 31: $4,450 + $6,900 + $2,180 + $3,960 + $1,190 + $2,180 = $20,860.
2. Find the remaining units on hand at Dec 31: 17,000 units (given in the question).
3. Calculate the value of the remaining units using the FIFO method:
To find the value of the remaining units, we need to consider the cost of the units purchased last. In this case, it would be the 2,000 units purchased on Dec 15 for $1.09 each.
The value of the remaining units is 2,000 x $1.09 = $2,180.
4. Calculate the dollar value of the ending inventory:
To find the dollar value of the ending inventory, add the value of the remaining units to the cost of the units sold before Dec 31:
$20,860 (cost of the units sold) + $2,180 (value of the remaining units) = $23,040.
Therefore, the dollar value of the ending inventory is $23,040.
To calculate the dollar value of the ending inventory using the FIFO method, you need to follow these steps:
1. Calculate the cost of units sold:
- Start by subtracting the number of units sold from the initial amount on hand (17,000).
- In this case, we have no information on the units sold, so we can assume all units were sold.
- Therefore, the cost of units sold would be the sum of the costs of all units purchased throughout the year.
2. Calculate the dollar value of the ending inventory:
- Start by determining the remaining units on hand after deducting the cost of units sold.
- Multiply the remaining units by the cost per unit for the most recent purchase.
Now let's calculate it step by step using the provided information:
1. Calculate the cost of units sold:
- Start with 17,000 units on hand.
- Add up the units purchased throughout the year:
- Jan 1: 5,000 units @ $0.89
Cost = 5,000 x $0.89 = $4,450
- Feb 15: 10,000 units @ $0.69
Cost = 10,000 x $0.69 = $6,900
- Apr 15: 2,000 units @ $1.09
Cost = 2,000 x $1.09 = $2,180
- Jul 15: 4,000 units @ $0.99
Cost = 4,000 x $0.99 = $3,960
- Oct 15: 1,000 units @ $1.19
Cost = 1,000 x $1.19 = $1,190
- Dec 15: 2,000 units @ $1.09
Cost = 2,000 x $1.09 = $2,180
Now, sum up all the costs:
$4,450 + $6,900 + $2,180 + $3,960 + $1,190 + $2,180 = $20,860
2. Calculate the dollar value of the ending inventory:
- As mentioned earlier, it is assumed that all units were sold, so the ending inventory would be zero.
Therefore, based on the calculations, the ending inventory has a dollar value of $0.