Use the following information for questions below
K-tel Industries had the following activity with one of its inventory items during the current period:
$$\begin{array}{l}
\text { }\
\begin{array} { l l l l }
&&\text {units }&\text { unit cost}\
\text { beginning}&\text {inventory }&30&\$8.00\
\text { purchase}&\text {december 5 }&8&10.5\
\text {sale }&\text {december 11 }&(40)\
\text {purchase }&\text {december 17}&60&12.00\
\text {sale }&\text {december 26 }&(70)\
\end{array}
\end{array}$$
-Using a perpetual inventory system and the FIFO cost formula,the cost of goods sold was
A)$975.
B)$1,080.
C)$1,175.
D)$1,300.

Question

Use the following information for questions below
K-tel Industries had the following activity with one of its inventory items during the current period:
$$\begin{array}{l}
\text { }\
\begin{array} { l l l l } 
&&\text {units }&\text { unit cost}\
\text { beginning}&\text {inventory }&30&\$8.00\
\text { purchase}&\text {december 5 }&8&10.5\
\text {sale }&\text {december 11 }&(40)\
\text {purchase }&\text {december 17}&60&12.00\
\text {sale  }&\text {december 26 }&(70)\
\end{array}
\end{array}$$
-Using a perpetual inventory system and the FIFO cost formula,the cost of goods sold was
A)$975.
B)$1,080.
C)$1,175.
D)$1,300.

Quizplus · Accepted Answer

Using the FIFO method, we assume that the first units purchased are the first ones sold. Therefore, the cost of the 50 units sold would be the cost of the first 25 units purchased at $40 per unit and the next 25 units purchased at $44 per unit. This would be:
25 units x $40 per unit = $1,000
25 units x $44 per unit = $1,100
Total cost of goods sold = $1,000 + $1,100 = $2,100
Average cost per unit = $2,100 / 50 units = $42 per unit
Therefore, the cost of goods sold using the FIFO method would be 50 units x $42 per unit = $1,080.

Use the Following Information for Questions Below K-Tel Industries Had

Use the Following Information for Questions Below
K-Tel Industries Had