Inventory has 160 units at $15 and 140 units at $18. Under FIFO, what cost is charged for issuing 220 units?
Correct Answer
B) $3,480
FIFO issues all 160 units from the first layer and 60 units from the second layer.
Why This Is the Correct Answer
FIFO issues all 160 units from the first layer and 60 units from the second layer.
Why the Other Options Are Wrong
Option A: $3,120
$3,120 is below the supported result for fifo inventory costing; it likely uses the wrong base, period, or account bucket.
Option C: $3,720
$3,720 is above the supported result for fifo inventory costing; it likely adds an unsupported amount or compares the wrong financial base.
Option D: $3,960
$3,960 is above the supported result for fifo inventory costing; it likely adds an unsupported amount or compares the wrong financial base.
Memory Technique
Issues and all live in different drawers; Warehouse Issue tells which opens.
Reference Hint
Open-book path: tab Builder's Guide to Accounting, 2001 to Section Two, Accounting for Materials, Controlling Inventory; use the job ledger figures in the stem and recompute the same accounting measure.
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