Chess Top uses the periodic inventory system. For the current month, the beginning inventory consisted of 360 units that cost $65 each. During the month, the company made two purchases: 540 units at $68 each and 270 units at $70 each. Chess Top also sold 900 units during the month. Using the FIFO method, what is the amount of cost of goods sold for the month?
A) $60,786.
B) $58,500.
C) $61,470.
D) $60,120.

Question

Quizplus · Accepted Answer

Under the FIFO (First-In, First-Out) method, the oldest inventory costs are assigned to the cost of goods sold first. Chess Top's sales of 900 units would first deplete the beginning inventory of 360 units at $65 each, then move to the units purchased at $68 each. Calculation: (360 units * $65) + (540 units * $68) = $23,400 + $36,720 = $60,120.

Chess Top Uses the Periodic Inventory System