A company just starting business made the following three inventory purchases in February: On Feb 15, there were 300 units sold. The company uses a perpetual inventory system.
-Using the FIFO inventory cost formula, the amount allocated to cost of goods sold for the February 15 sale is
A) $1,525.
B) $1875.
C) $4,950.
D) $3,075.

Question

A company just starting business made the following three inventory purchases in February:  On Feb 15, there were 300 units sold. The company uses a perpetual inventory system.
-Using the FIFO inventory cost formula, the amount allocated to cost of goods sold for the February 15 sale is
A) $1,525. 
B) $1875. 
C) $4,950. 
D) $3,075.

Quizplus · Accepted Answer

Under the FIFO (First-In, First-Out) inventory cost formula, the oldest inventory costs are assigned to the cost of goods sold first. Assuming the question pertains to a scenario where the inventory bought earlier is cheaper than the inventory bought later (a common situation), and without specific inventory purchase dates and costs provided in the question, the correct answer cannot be precisely calculated. However, based on the options given, the choice that represents a plausible cost of goods sold under FIFO, assuming increasing costs of inventory purchases, is chosen as the correct answer.

A Company Just Starting Business Made the Following Three Inventory