To calculate the cost of the ending inventory using the specific identification method, we track the actual cost of each unit remaining in inventory at the end of the year. We do this by identifying which units are left from each purchase and then multiplying the quantity of these units by their purchase cost.
Here's a step-by-step breakdown of the calculation:
1. Units remaining from January:
- Units: 6
- Cost per unit: \[tex]$125
- Total cost for January's units: \(6 \times 125 = \$[/tex]750\)
2. Units remaining from February:
- Units: 8
- Cost per unit: \[tex]$135
- Total cost for February's units: \(8 \times 135 = \$[/tex]1080\)
3. Units remaining from May:
- Units: 10
- Cost per unit: \[tex]$145
- Total cost for May's units: \(10 \times 145 = \$[/tex]1450\)
4. Units remaining from September:
- Units: 8
- Cost per unit: \[tex]$155
- Total cost for September's units: \(8 \times 155 = \$[/tex]1240\)
5. Units remaining from November:
- Units: 14
- Cost per unit: \[tex]$165
- Total cost for November's units: \(14 \times 165 = \$[/tex]2310\)
Now, we add all these individual costs together to get the total cost of the ending inventory:
[tex]\[ \text{Total cost of ending inventory} = 750 + 1080 + 1450 + 1240 + 2310 \][/tex]
Calculating the sum:
[tex]\[ 750 + 1080 = 1830 \][/tex]
[tex]\[ 1830 + 1450 = 3280 \][/tex]
[tex]\[ 3280 + 1240 = 4520 \][/tex]
[tex]\[ 4520 + 2310 = 6830 \][/tex]
Thus, the cost of the ending inventory is \$6830.
