ITPEC FE Morning October 2023 Question 78
ITPEC FE Morning October 2023 — Question 78 of 80
Under FIFO, the oldest units are sold first. Total available: 100 units @10 + 500 @14 + 400 @12 = 1,000 units. After selling 400 units, FIFO removes the oldest layers first: all 100 units @10, then 300 units @14. Remaining inventory: 200 units @14 = 2,800 and 400 units @12 = 4,800. Total = 7,600.
Why not others:
- (a) 7,080 — incorrect calculation, does not follow FIFO layer logic
- (c) 7,800 — would result from selling fewer old units than required
- (d) 8,000 — closer to LIFO or average cost result, not FIFO
Key rule: FIFO ending inventory = cost of the newest remaining units after removing oldest layers first.
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