[The following information applies to the questions displayed below.]
Castle TV,Inc.purchased 1,000 monitors on January 5 at a per-unit cost of $185,and another 1,000 units on January 31 at a per-unit cost of $230.In the period from February 1 through year-end,the company sold 1,800 units of this product.At year-end,200 units remained in inventory.
-Assume that Castle TV,Inc.uses the FIFO flow assumption.The cost of the 200 units in inventory at year-end is:
A)$41,500.
B)$46,000.
C)$37,000.
D)$83,000.

Question

Quizplus · Accepted Answer

According to FIFO, the units sold are assumed to be the first ones purchased, so the cost of goods sold would be calculated as:
1,000 units x $185 = $185,000 for the January 5 purchase, and
800 units x $230 = $184,000 for 800 of the units from the January 31 purchase.
Total cost of goods sold = $369,000
The cost of the 200 units remaining in inventory at year-end would be the cost of the most recent purchase, which is 200 x $230 = $46,000. Therefore, the correct answer is B.

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