A company had beginning inventory of 10 units at a cost of $20 each on March 1.On March 2,it purchased 10 units at $22 each.On March 6 it purchased 6 units at $25 each.On March 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 10 units purchased on March 1 (10 x $20 = $200) and the cost of the 12 units purchased on March 2 (12 x $22 = $264). The total cost of the 22 units sold is $200 + $264 = $464.

A Company Had Beginning Inventory of 10 Units at a Cost