Widgets Inc

question 96

Essay

Widgets Inc.,a company that sells only one type of widget,had a beginning inventory in September of 11 units,at $200/unit.Throughout the first two weeks,they purchased additional inventory in the amount of 5 widgets at $209/widget and 9 widgets at $220 a piece.During the third week,they sold 12 widgets at $420/each.If replacement cost fell to $205 in October,and the company is using FIFO,what is the adjustment that would be made to the Inventory account?

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Definitions:

Special Order

An order that deviates from the regular product offerings of a business, often requiring unique pricing and terms.

Regular Customers

Individuals who frequently purchase goods or services from the same business, showing loyalty and habitual buying.

Relative Sales Value Method

A cost allocation technique that distributes joint costs to multiple products based on their relative sales values.

Joint Costs

Costs incurred in the process of producing two or more products at the same time, which cannot be easily attributed to individual products.