A company had inventory of 10 units at a cost of $20 each on November 1. On November 2, it purchased 10 units at $22 each. On November 6 it purchased 6 units at $25 each. On November 8, it sold 22 units for $54 each. Using the FIFO perpetual inventory method, what was the cost of the 22 units sold?
A) $470.
B) $490.
C) $450.
D) $570.
E) $520.

Question

Quizplus · Accepted Answer

FIFO (First-In, First-Out) method assumes that the first units purchased are the first units sold. Therefore, the cost of the 22 units sold is the cost of the first 10 units purchased at $20 each, plus the cost of the next 10 units purchased at $22 each, plus the cost of the first 2 units purchased at $25 each. This totals $470.

A Company Had Inventory of 10 Units at a Cost