Inventory contains an older layer of 160 units at $15 each and a newer layer of 140 units at $18 each. Under FIFO, what cost is assigned to an issue of 220 units?
Correct Answer
B) $3,480
FIFO charges the oldest 160 units at $15, then the remaining 60 units at $18: $2,400 + $1,080 = $3,480. The issue is 220 units in total. The $3,960 option incorrectly prices all 220 units at $18.
Why This Is the Correct Answer
FIFO charges the oldest 160 units at $15, then the remaining 60 units at $18: $2,400 + $1,080 = $3,480. The issue is 220 units in total. The $3,960 option incorrectly prices all 220 units at $18.
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