Question

Trumpeting Trumpets has the following inventory data: July 1 Beginning inventory 50 units at $120 5 Purchases 300 units at $112 14 Sale 200 units 21 Purchases 150 units at $115 30 Sale 140 units Assuming that a periodic inventory system is used, what is the cost of goods sold on a FIFO basis?

Answer 1

Answer:

Cost of Goods Sold FIFO basis = $38480

Explanation:

FIFO basis assumes that the units that are bought first will be the ones that are sold first. So, the cost of goods sold will include the cost of units that are bought first at the cost they were bought for.

Cost of Goods Sold FIFO basis

Sales in units = 200 units + 140 units = 340 units

So, the cost of goods sold will include,

• 50 units at $120  = 6000
• 290 units at $112 = 32480
• Total Cost of Goods Sold = 6000 + 32480 = $38480