The following lots of Commodity D were available for sale during the year. Beginning inventory 10 units at $60 First purchase 25 units at $65 Second purchase 30 units at $68 Third purchase 15 units at $75 The firm uses the periodic system, and there are 25 units of the commodity on hand at the end of the year. What is the ending inventory balance at the end of the year using the FIFO method? a.$1,685 b.$3,585 c.$1,575 d.$1,805

d.$1,805

Explanation:

The computation of the ending inventory using the FIFO method under the periodic system is shown below:

Since there is 25 units given out of which 15 units are taken for $75 and the remaining 10 units are taken for $68

So,

= 15 units ×$75 + 10 units × $68

= $1,125 + $680

= $1,805

Hence, the ending inventory using the FIFO method is $1,805

WIP inventory       68,000 debit

Factory Overhead   8000 debit

     Raw Materials Inventory   76,000 credit

WIP inventory         55.000 debit

Factory Overhead  12,400 debit

  Factory Payroll payable       77,400 credit

WIP inventory       31,250 debit

   Factory overhead      31,250 credit

Finished Goods Inventory 73,750 debit

           WIP inventory              73,750 credit

Explanation:

Direct Materials used:

10,000 + 20,000 + 24,000 + 14,000 = 68,000

Direct Labor used:

8,000 + 17,000 + 18,000 + 12,000 = 55,000

Overhead Applied:

6,000 + 12,750 + 13,500 + 9,000 = 31,250

Overhead rate:

6,000 /  8,000 =  0.75

12,750 / 17,000 =  0.75

Finished goods:

24,000 + 49,750 = 73,750