Vargas Company uses the perpetual inventory system and the FIFO cost flow method.During the current year,Vargas purchased 400 units of inventory that cost $15.00 each.At a later date during the year,the company purchased an additional 800 units of inventory that cost $18.00 each.Vargas sold 500 units of inventory for $27.00.What is the amount of cost of goods sold that will appear on the current year's income statement?
A)$7,800
B)$6,000
C)$4,500
D)$5,700

Question

Quizplus · Accepted Answer

The first-in,first-out (FIFO)cost flow method requires that the cost of the items purchased first be charged to cost of goods sold.
Cost of goods sold = (400 × $15.00)+ (100 × $18.00)= $7,800

Vargas Company Uses the Perpetual Inventory System and the FIFO