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    FIFO Inventory Management and a Firms EBITDA

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    In 2010, Jack's Art Gallery sold 200 original works of art for $1,240,520. The gallery acquired the works sold for $530,000. Each painting was framed using predesigned framing kits in the gallery's own workshop. The firm bought 100 kits in January for $50,000, 100 kits in March for $60,000, 100 kits in May for $40,000 and 100 kits in August for $30,000. Other costs of operation, including salaries, supplies, rent, etc., totaled $200,000. The company depreciated its assets by $120,000 and paid interest on loans totaling $55,000. Assuming no other costs and that Jack's Art Gallery used FIFO in its inventory management, the firm's EBITDA for 2010 was:

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    Solution Preview

    Assuming no other costs and that Jack's Art Gallery used FIFO in its inventory management, the firm's EBITDA for 2010 was the following (see below):

    Computation of cost of kit
    100 kit purchased ...

    Solution Summary

    The solution involves FIFO Inventory Management and a firm's EBITDA. Answers are provided in table form.

    $2.19

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