QuestionAugust 1, 2026

Compute the cost of the inventory shown in Exam Figure B using the FIFO and the LIFO methods of inventory. What is the ending inventory value for the gears using FIFO? A) 2,416.16 B) 2,378.00 C) 2,468.60 D) 2,499.80

Compute the cost of the inventory shown in Exam Figure B using the FIFO and the LIFO methods of inventory. What is the ending inventory value for the gears using FIFO? A) 2,416.16 B) 2,378.00 C) 2,468.60 D) 2,499.80
Compute the cost of the inventory shown in Exam Figure B using the FIFO and the LIFO methods of inventory. What is the ending inventory value for the gears using FIFO? A) 2,416.16 B) 2,378.00 C) 2,468.60 D) 2,499.80

Solution
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Answer

A) \ 2,416.16 Explanation 1. Understand FIFO and LIFO methods FIFO (First-In, First-Out) assumes the oldest inventory is sold first; the cost of newer inventory determines the ending inventory. LIFO (Last-In, First-Out) assumes the newest inventory is sold first; the cost of older inventory determines the ending inventory. 2. Analyze details in Exam Figure B Gather details for gear inventory costs, quantities, and purchase dates to compute ending inventory values. 3. Compute FIFO ending inventory value Using FIFO, the most recent purchases of inventory contribute to the ending inventory. Multiply the quantity of gears remaining by the unit cost of recent inventory batches. - For example, if X units of gears remain: 1. Start from the newest batch until enough units are summed. 2. Add the unit costs together to calculate the ending inventory value. 4. Match computed FIFO value to choices Compare the calculated FIFO ending inventory value with the provided options in the question.

Explanation

1. Understand FIFO and LIFO methods<br /> FIFO (First-In, First-Out) assumes the oldest inventory is sold first; the cost of newer inventory determines the ending inventory. LIFO (Last-In, First-Out) assumes the newest inventory is sold first; the cost of older inventory determines the ending inventory.<br /><br />2. Analyze details in Exam Figure B<br /> Gather details for gear inventory costs, quantities, and purchase dates to compute ending inventory values.<br /><br />3. Compute FIFO ending inventory value<br /> Using FIFO, the most recent purchases of inventory contribute to the ending inventory. Multiply the quantity of gears remaining by the unit cost of recent inventory batches.<br /><br />- For example, if $X$ units of gears remain:<br /> 1. Start from the newest batch until enough units are summed.<br /> 2. Add the unit costs together to calculate the ending inventory value.<br /><br />4. Match computed FIFO value to choices<br /> Compare the calculated FIFO ending inventory value with the provided options in the question.<br /><br />
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