Question

A physical count of merchandise inventory on November 30 reveals that there are 96 units on hand. Cost of goods sold (rounded) under FIFO is

Answer 1

Answer: $1,712

Explanation:

If the company uses FIFO it means that they sell their earlier inventory first. If there are 96 units on hand, it means that these 96 units would be the latest inventory.

That means that these 96 units comprise of:

• 86 units purchased on November 25 at $6.30 each and,
• 10 units from the November 17 purchase of 58 units at $6.05 each which means 48 units were sold from this purchase.

The units sold were therefore:

= (29 * 5.80) + (115 * 6.20) + (48 * 6.05)

= 168.20 + 713 + 290.40

= $1,171.60

= $1,712