A firm has beginning inventory of 300 units at a cost of $11 each.Production during the period was 650 units at $12 each.If sales were 700 units,what is the cost of goods sold (assume FIFO)?

Question

Quizplus · Accepted Answer

Using FIFO method,
Cost of Goods Available for Sale = Cost of Beginning Inventory + Cost of Goods Produced
= (300 units x $11) + (650 units x $12)
= $3,300 + $7,800
= $11,100

Cost of Goods Sold = Cost of Goods Available for Sale - Cost of Ending Inventory
We need to find the cost of ending inventory to calculate the cost of goods sold.

Ending Inventory = Beginning Inventory + Production - Sales
= 300 + 650 - 700
= 250 units

Cost of Ending Inventory = 250 units x $12
= $3,000

Cost of Goods Sold = $11,100 - $3,000
= $8,100

Therefore, the correct answer is D) $8,100.

A Firm Has Beginning Inventory of 300 Units at a Cost