Multiple choice

O Ltd. maintains the inventory records under perpetual system of inventory. Consider the following data pertaining to the inventory of O Ltd. held for March, 2016.

     
Date
Particulars
Quantity
Cost per unit (Rs.)
March 1 Opening Inventory 15 400
March 4 Purchases 20 450
March 6 Purchases 10 460

If the company sold 32 units on March 24, 2016, what will be the value of closing inventory under FIFO method for March 2016?

  1. Rs. 5,200

  2. Rs. 5,681

  3. Rs. 5,800

  4. Rs. 5,950

  5. None of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

As FIFO method of inventory valuation is followed, the closing inventory includes: 3 units @ Rs. 450 per unit 10 units @ Rs. 460 per unit So, the value of closing inventory: Closing inventory = (3 * 450) + (10 * 460) = Rs. 5,950

Keep practicing — related questions