The following information applies to the questions displayed below.]A company reports the following beginning inventory and two purchases for the month of January. On January 26, the company sells 350 units. Ending inventory at January 31 totals 150 units. UnitsUnit CostBeginning inventory on January 1320$ 3.00Purchase on January 9803.20Purchase on January 251003.34Required:Assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the FIFO method.

### To solve this problem using the **FIFO (First-In, First-Out)** method under the perpetual inventory system, let's break down the steps:

1. **Beginning Inventory** (January 1):  
   - 320 units at $3.00 per unit = **$960**.

2. **First Purchase** (January 9):  
   - 80 units at $3.20 per unit = **$256**.

3. **Second Purchase** (January 25):  
   - 100 units at $3.34 per unit = **$334**.

4. **Total Inventory Before Sale (on January 25)**:  
   - 320 units at $3.00 = $960  
   - 80 units at $3.20 = $256  
   - 100 units at $3.34 = $334  
   **Total units: 500 units**  
   **Total cost: $1,550**

5. **Units Sold on January 26**:  
   The company sells 350 units on January 26. Since this is FIFO, we sell the oldest inventory first.
   - From the beginning inventory (320 units at $3.00 per unit), we sell **all 320 units**:  
     - 320 units × $3.00 = **$960**.
   - From the January 9 purchase (80 units at $3.20 per unit), we sell **30 units**:  
     - 30 units × $3.20 = **$96**.

   **Total cost of goods sold (COGS): $960 + $96 = $1,056**.

6. **Ending Inventory** (after sale):  
   After selling 350 units, we are left with 150 units in inventory, consisting of:
   - 50 units from the January 9 purchase at $3.20 = **50 units × $3.20 = $160**.
   - 100 units from the January 25 purchase at $3.34 = **100 units × $3.34 = $334**.

   **Total cost of ending inventory**: $160 + $334 = **$494**.

### Answer:
The costs assigned to the ending inventory on January 31, using the FIFO method, are **$494**.

Would you like more details or have any questions?

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Here are five related questions you might find interesting:
1. How would the cost assigned to ending inventory change using the LIFO method?
2. What is the impact of the weighted-average cost method on the ending inventory?
3. How does the perpetual inventory system differ from the periodic system in FIFO?
4. What effect does FIFO have on net income during periods of rising prices?
5. How does inventory turnover ratio relate to FIFO?

**Tip:** FIFO is often preferred in times of inflation as it results in lower cost of goods sold (COGS) and higher net income.

A company reports the following beginning inventory and two purchases for the month of January. On January 26, the company sells 350 units. Ending inventory at January 31 totals 150 units. UnitsUnit CostBeginning inventory on January 1320$ 3.00Purchase on January 9803.20Purchase on January 251003.34Required: Assume the perpetual inventory system is used. Determine the costs assigned to ending inventory when costs are assigned based on the FIFO method.

Learn how to calculate the costs assigned to ending inventory using the FIFO method under the perpetual inventory system. This example covers key inventory management concepts such as cost of goods sold (COGS) and perpetual system calculations, ideal for accounting students.

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