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FIFO and LIFO. Analyze the following scenario: The Hospital for Ordinary Surgery uses pharmaceuticals for its patients....

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Accounting

FIFO and LIFO. Analyze the following scenario:

The Hospital for Ordinary Surgery uses pharmaceuticals for itspatients. It started the year on January 1, with an inventory of1,000 doses of an antibiotic drug that cost $17 per dose. OnJanuary 2, it purchased another 300 does for $21 each. From January3 through June 30 it used 800 doses. On July 1, it bought 500 moredoses at $23 each. From July 2 through the end of the year it used400 doses. What is the inventory value at the end of the year,assuming FIFO? What is the value assuming LIFO? Clearly label thecalculations of the inventory amounts using Excel. Use formulas tocalculate the FIFO and LIFO inventories and format the cells toinsert a comma if there is more than three numbers and round to thenearest whole number.

Explain the advantages and disadvantages of FIFO and LIFOinventory methods and evaluate the best inventory method is bestfor this scenario.

Answer & Explanation Solved by verified expert
3.6 Ratings (305 Votes)
Under FIFO Method inventory purchased first is utilised first Units in Closing Stock 1000300800500400 600 doses Value will be equal to the latest inventory purchased 50023    See Answer
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