The Acceber Corporation had 5,000 mugs on hand at the beginning of April. Each m
ID: 341363 • Letter: T
Question
The Acceber Corporation had 5,000 mugs on hand at the beginning of April. Each mug had cost the company $2. The company purchased 9,000 mugs on April 11 at a cost of $3 each. The company purchased 12,000 mugs on April 20 at a cost of $4 each. The company sold 8,000 mugs on April 15 and 10,000 mugs on April 26. The company charged its customers $6 per mug for each mug sold in April. The company uses the FIFO inventory method.
Determine the company's cost of merchandise inventory on hand at the end of April.
$32,000
$53,000
$21,000
$64,000
a.$32,000
b.$53,000
c.$21,000
d.$64,000
Explanation / Answer
Answer is $32,000
Beginning Inventory: 5,000 mugs @ $2 per mug
Purchase April 11: 9,000 mugs @ $3 per mug
Purchase April 20: 12,000 mugs @ $4 per mug
Number of mugs available for sale = 5,000 + 9,000 + 12,000
Number of mugs available for sale = 26,000
Number of mugs sold = 8,000 + 10,000
Number of mugs sold = 18,000
Number of mugs in ending inventory = Number of mugs available for sale - Number of mugs sold
Number of mugs in ending inventory = 26,000 - 18,000
Number of mugs in ending inventory = 8,000
Ending inventory contains 8,000 mugs from April 20 purchase
Cost of Ending Inventory = 8,000 * $4
Cost of Ending Inventory = $32,000
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