ACCA MA · Chapter 4 · Question 5 of 11
Inventory records for a material show: Day 1 Opening inventory 200 units at $5 Day 5 Purchased 300 units at $6 Day 10 Issued 400 units Day 15 Purchased 250 units at $7 Day 20 Issued 200 units Using FIFO, what is the value of closing inventory?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) $1,050
Explanation
Closing units = 200 + 300 + 250 - 400 - 200 = 150. Under FIFO the oldest units are issued first, so the 150 units left are all from the latest purchase at $7. Closing inventory = 150 x 7 = $1,050. (The day 10 issue uses 200 at $5 and 200 at $6; the day 20 issue uses 100 at $6 and 100 at $7.)
More Accounting for materials MCQs
- Q7When prices are rising, how does FIFO compare with AVCO?
- Q8Which document does the stores department send to the purchasing department to ask for materials to be bought?
- Q9Annual demand for a material is 36,000 units, with a purchase price of $10 per unit. Ordering costs are $40 per order, and holding costs…
- Q10A stores record shows 2,400 units of a material physically in stock, 1,500 units on order from suppliers but not yet received, and 1,100…
- Q11Which of the following is an inventory holding cost?