Mountain company uses the periodic inventory system. for the current month, the beginning inventory consisted of 1,200 units that cost $60 each. during the month, the company made two purchases: 500 units at $58 each and 2,000 units at $56 each. mountain company also sold 2,150 units during the month. using the periodic fifo method, what is the cost of ending inventory?

$86,800

Explanation:

Given:

Beginning inventory = 1,200 units

Unit cost of beginning inventory = $60

Purchases:

500 units at $58 each

2,000 units at $56 each

Total units sold = 2,150 units

Now,

Total units before selling = Beginning inventory + Purchases

= 1,200 + 500 + 2,000

= 3,700

Units left in the inventory = 3,700 - 2,150 = 1,550

Under the FIFO method the units sold are the units which are purchased first

Therefore,

The cost of ending inventory = Units left in the inventory × Unit price of the last purchase

= 1,550 × $56

= $86,800

answer; read and consider the content of the items;