Business, 07.07.2021 04:30 Nerdymania

On December 31, there were 53 units remaining in ending inventory. These 53 units consisted of 9 from January, 10 from February, 14 from May, 8 from September, and 12 from November. Using the specific identification method, what is the cost of the ending inventory

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Answer from: Isaacochoa780

Cost of the ending inventory = $7,108

Explanation:

Note: This question is not complete. The complete question is therefore provided before answering the question as follows:

A company had the following purchases during the current year:

January 17 Units at $112

February 37 Units at $123

May 32 Units at $135

September 29 Units at $143

November 27 Units at $153

On December 31, there were 53 units remaining in ending inventory. These 53 units consisted of 9 from January, 10 from February, 14 from May, 8 from September, and 12 from November. Using the specific identification method, what is the cost of the ending inventory?

Explanation of the answer is now provided as follows:

Specific identification method is an inventory method under which costs of goods sold and the closing/ending inventory are calculated using the particular cost of each inventory batch at the moment they were received.

Therefore, cost of the ending inventory is calculated as sum of the product of the number of closing units from each month and the cost per unit of purchases in that month.

Therefore, we have:

Cost of the ending inventory = (Number of closing units from January * Cost per unit of January Purchases) + (Number of closing units from February * Cost per unit of February Purchases) + (Number of closing units from May * Cost per unit of May Purchases) + (Number of closing units from September * Cost per unit of September Purchases) + (Number of closing units from November * Cost per unit of November Purchases) ………… (1)

Substituting the relevant values into equation (1), we have:

Cost of the ending inventory = (9 * $112) + (10 * $123) + (14 * $135) + (8 * $143) + (12 * $153) = $7,108

Answer from: Quest

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Answer from: Quest

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