Calculate the cost of ending inventory using FIFO inventory cost method.

A)$800
B)$760
C)$580
D)$500

Question

Calculate the cost of ending inventory using FIFO inventory cost method.

A)$800 
B)$760 
C)$580 
D)$500

Quizplus · Accepted Answer

Using the FIFO inventory cost method, we assume that the first items purchased are the first items sold, so the cost of the ending inventory would be based on the cost of the most recent purchases. 
In this case, we have:
- 50 units purchased at $10 each = $500 total cost
- 30 units purchased at $8 each = $240 total cost
- 20 units purchased at $7 each = $140 total cost

When we sell 70 units, we use up all of the 50 units at $10 each and 20 units at $8 each. That means our ending inventory would consist of the remaining 10 units at $8 each and 20 units at $7 each.

The cost of the 10 units at $8 each would be $80, and the cost of the 20 units at $7 each would be $140.

Adding these costs together, we get a total cost of $220 for the ending inventory.

Therefore, the correct answer is B) $760.

Calculate the Cost of Ending Inventory Using FIFO Inventory Cost