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Name: ### Inventory Management Using FIFO Cost AssumptionWynn Co. uses the
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Description: ### Inventory Management Using FIFO Cost AssumptionWynn Co. uses the periodic inventory system to account for inventories. Information related to Wynn Company's inventory at October 31 is given below:- **October 1** - Beginning inventory: 400 units

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Accounting

What is the value of the ending inventory using the FIFO cost assumption if 600 units remain on hand at October 31.

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

Chapter6: Cost Of Goods Sold And Inventory

Section: Chapter Questions

Problem 41BE: ( Appendix 6B) Inventory Costing Methods: Periodic Inventory Systems. Refer to the information for...

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Concept explainers

Inventory Valuation

Before discussing the topic inventory valuation let’s discuss the meaning of inventory. In accounting, inventory is also known as stock. Inventory means all the finished goods, materials, merchandise that a business holds for the purpose of selling it in the market with the motive of earning profit.

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Question

### Inventory Management Using FIFO Cost Assumption

Wynn Co. uses the periodic inventory system to account for inventories. Information related to Wynn Company's inventory at October 31 is given below:

- **October 1**
- Beginning inventory: 400 units @ $10.00 = $4,000
- **October 8**
- Purchase: 800 units @ $10.40 = $8,320
- **October 16**
- Purchase: 600 units @ $10.80 = $6,480
- **October 24**
- Purchase: 200 units @ $11.60 = $2,320
- **Total Units and Costs:** 2,000 units = $21,120

### Calculation

**What is the value of the ending inventory using the FIFO cost assumption if 600 units remain on hand at October 31?**

Possible answers:
- $6,640
- $6,080
- $6,336
- $6,420

Using the FIFO (First-In, First-Out) method, the cost of the ending inventory would be calculated by taking the cost of the latest purchases and working backwards until the total remaining units are accounted for.

October 24 Purchase:
- 200 units @ $11.60 = $2,320

October 16 Purchase:
- 400 units @ $10.80 = $4,320

Therefore, the value of the ending inventory is $2,320 + $4,320 = $6,640

*Correct Answer:* $6,640

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