A company had beginning inventory of 10 units at a cost of $14 each on March 1. On March 2, it purchased 10 units at $26 each. On March 6 it purchased 6 units at $21 each. On March 8, it sold 23 units for $64 each. Using the FIFO perpetual inventory method, what was the cost of the 23 units sold?

Question

Business

Yoselin Hawkins

12 January, 16:47

A company had beginning inventory of 10 units at a cost of $14 each on March 1. On March 2, it purchased 10 units at $26 each. On March 6 it purchased 6 units at $21 each. On March 8, it sold 23 units for $64 each. Using the FIFO perpetual inventory method, what was the cost of the 23 units sold?

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Daphne Curry · Answer 1

COGS 463

Explanation:

FIFO method:

begining inventory: 10 units at $ 14

March 2nd purchases: 10 units at $ 26

March 6th purchases: 6 units at $ 21

It sold 23 units:

We will take units from the top, which are the frist units until fulfil the order.

23 - 10 units at $ 14 = 13

After using the beginning inventory, we are still short, so we use next units:

13 - 10 units at $ 26 = 3

we are still short by 3 units, so we move to next units:

3 - 3 units at $ 21 = 0

We use 3 units from the last purchase and we complete the request.

Now we calculate cost of goods sold

Total COGS:

10 x 14 = 140

10 x 26 = 260

3 x 21 = 63

Total 463