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A company purchased 200 units for $40 each on january 31. It purchased 200 units for $30 each on february 28. It sold a total of 250 units for $100 each from march 1 through december 31. If the company uses the last-in, first-out inventory costing method, calculate the cost of ending inventory on december 31. (assume that the company uses a perpetual inventory system. )

Respuesta :

The cost of ending inventory on December 31st is; $5,250

What is the cost of inventory?

  • January 31 Purchases = 200 × $40 = $8,000

  • February 28 Purchases = 200 × $30 = $6,000

Thus;

Total cost of purchases = $8000 + $6000 = $14000

Weighted average cost = $14000 ÷ (200 + 200) = $35 per unit

Units of ending inventory = Total units purchased - Total units sold

Units of ending inventory = (200 + 200) - 250 = 150

Amount of ending inventory on December 31 = 150 × $35 = $5,250

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