Answer :
Answer:
$63,120
Explanation:
Beginning inventory layer at base year retail:
= Beginning inventory at retail ÷ Year end cost index
= $ 120,000 ÷ 1.00
= 120,000
Current inventory layer at base year retail:
= Ending inventory at retail ÷ Year end cost index
= $ 168,000 ÷ 1.12
= 150,000
Estimate of ending inventory:
= Base + Current
= (inventory at base year retail × Cost percentage × Year end cost index) + (inventory at base year retail × Cost percentage × Year end cost index)
= ( 120,000 × 40% × 1.00) + (30,000 × 45% × 1.12)
= $48,000 + $15,120
= $63,120