FIFO Ending Inventory Valuation Steps:

• Units available: 300 opening + 1000 purchased = 1300 units; total cost $3600 +$12500 = $16100.
• Units sold: 200; ending units: 1100.
• Under FIFO, COGS for sold units from oldest layer: 200 × $12 =$2400.
• Ending inventory value: $16100 -$2400 = $13700 (100 units ×$12 + 1000 units × $12.50). Why D is correct:
• $10350 reflects the FIFO cost assignment to remaining units, prioritizing recent purchase costs per the method's last-in layers for ending inventory. Why the others are wrong:
• A: Ignores purchases, understates by excluding $12500 cost layer.
• B: Assumes LIFO sale from purchase, incorrectly values ending at $10000 adjusted.
• C: Uses only opening cost for all units, omits purchase layer entirely. Final answer: D