Question 21 - 9706/12/M/J/19

FIFO inventory valuation with uniform unit costs Steps: - Record receipts: 6 July 100 units @ $15.50; 10 July 100 units @$ 15.50; 25 July 50 units @ $15.50 (total 250 units @$ 15.50 each, cost $3, 875) . - R e c o r d i s s u e s : 10 J u l y 80 u n i t s; 25 J u l y 100 u n i t s (t o t a l 180 u n i t s i s s u e d) . - A p p l y F I F O : E n d i n g i n v e n t o r y o f 70 u n i t s c o n s i s t s o f l a t e s t r e c e i p t s (20 u n i t s f r o m$ 15.50). - Calculate value: 70 units × $15.50 =$ 1,085. Why A is correct: - FIFO values ending inventory using costs of most recent purchases; with identical unit costs, it equals total cost less cost of earliest 180 units issued ( $3,875 - 180 ×$ 15.50 = $1,085). Why the others are wrong: - B$ 1092: Results from misreading unit cost as $15.60 (70 ×$ 15.60 = $1,092). - C$ 1102: Results from miscounting ending units as 71 (71 × $15.50 ≈$ 1,100.50, rounded up). - D $1106: Results from erroneous unit cost like$ 15.80 (70 × $15.80 =$ 1,106). Final answer: …

Explanation