CFA Level I · CFA Level I Exam · Analysis of Inventories
Under a perpetual system, a company has 50 units at 20 and then buys 50 units at 24. It then sells 60 units. Ending inventory under FIFO is closest to:
Ending inventory under FIFO is 960. The 60 units sold consume the 50 oldest units at 20 and 10 units at 24, leaving 40 units at 24. Total cost available of 2,200 less COGS of 1,240 also gives 960.
- A880Correct
- B960
- C1,000
Explanation
FIFO sells the 50 units at 20 first, then 10 units at 24. Remaining are 40 units at 24 = 960. Checking: total cost 1,000+1,200=2,200; COGS 1,000+240=1,240; ending 960.
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