A company has inventory of 10 units at a cost of $10 each on June 1. On June 3, they purchased 20 units at $12 each. 12 units are sold on June 5. Using the FIFO periodic inventory method, what is the cost of the 12 units that were sold?
A)$120
B)$124
C)$128
D)$130
E)$140

Question

Quizplus · Accepted Answer

According to FIFO (First-In, First-Out) method, the first units to be sold are the ones in the beginning inventory. Then, the cost of the remaining units is calculated based on the cost of the last purchase. So, the cost of goods sold would be:
10 units at $10= $100
2 units from the purchase on June 3 at $12= $24
Total cost of goods sold= $124. Thus, the answer is B.

A Company Has Inventory of 10 Units at a Cost