A company had the following purchases during the current year: January: 10 units at $120 February: 20 units at $130 May: 15 units at $140 September: 12 units at $150 November: 10 units at $160 On December 31, there were 26 units remaining in ending inventory

Finance Mar 23, 2021

A company had the following purchases during the current year:

January: 10 units at $120

February: 20 units at $130 May: 15 units at $140 September: 12 units at $150 November: 10 units at $160

On December 31, there were 26 units remaining in ending inventory. These 26 units consisted of 2 from January 4 from February 6 from May, 4 from September, and 10 from November. Using the specific identification method, what is the cost of the ending inventory?

a. $3,500

b. $3,800

c. $3,960

d. $3,280

e. $3,640

Expert Solution

Answer: b .

Correct option is "B".

Explanation:

Cost of ending inventory = (2 units from January * $120) + (4 units from February * $130) + (6 units from May * $140) + (4 units from september * $150) + (10 units from November * $160)

= (2 * $120) + (4 * $130) + (6 * $140) + (4 * $150) + (10 * $160)

= $240 + $520 + $840 + $600 + $1,600

= $3,800.

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