Question

Tess Company's inventory records show the following data for the month of May: Units Unit Cost Inventory, May 1 200 $2.00 Purchases: May 8 200 3.00 May 15 100 4.00 The company uses a periodic inventory system. A physical inventory on May 30 shows 150 units on hand. Assuming FIFO (First-In-First-Out) inventory costing, calculate the cost of goods sold. a. $1,100 b. $850 c. $700 d. $980

Answer 1

Correct Answer: Option C: $ 850

Working:

	FIFO
A	Total Units Available for sale			500			$                      1,400
	Units Sold			350
	Ending Inventory Units			150
	Valuation
	Cost of Goods Sold		200		$                       2.00		$                          400
			150		$                       3.00		$                          450
B	Total Cost of Goods Sold		350	units			$                          850
A-B	Ending Inventory		150	units			$                          550

Cost of Goods Available for sale
	Units	Cost per unit	value
Purchases	200	$                2.00	$                        400
Purchases	200	$                3.00	$                        600
Purchases	100	$                4.00	$                        400
Total	500		$                     1,400

End of Answer.

Thanks