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Ashland Company has a perpetual inventory system and uses the FIFO method of inventory costing. Ashland had a beginning inventory of 50 units and reported the following events during the month of June:

-The cost of goods sold for the June 16 sale is:
A)$780
B)$755
C)$715
D)$650

Question

Use the following to answer questions 
Ashland Company has a perpetual inventory system and uses the FIFO method of inventory costing. Ashland had a beginning inventory of 50 units and reported the following events during the month of June:
 
-The cost of goods sold for the June 16 sale is:
A)$780 
B)$755 
C)$715 
D)$650

Quizplus · Accepted Answer

Using the FIFO method, the cost of the 40 units sold on June 16 would be calculated as follows:
- 20 units would come from the beginning inventory at $15 per unit: 20 units x $15/unit = $300
- 20 units would come from the June 12 purchase at $18 per unit: 20 units x $18/unit = $360
Total cost of goods sold for June 16 sale would be $660 ($300 + $360).
Adding the cost of goods sold for the June 6 sale (10 units x $14/unit = $140) gives a total cost of goods sold for the month of $800.
Therefore, the cost of goods sold for the June 16 sale is $660, which is option B.

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