The Farley Corporation starts the year with a beginning inventory of 3,000 units at $5 per unit.The company purchases 5,000 units at $4 each in February and 2,000 units at $6 each in March.Farley sells 1,500 units during this quarter.Farley has a perpetual inventory system and uses the FIFO inventory costing method.What is the cost of goods sold for the quarter?
A) $6,000
B) $9,340
C) $7,500
D) $9,000

Question

Quizplus · Accepted Answer

Under FIFO, the cost of goods sold is calculated using the oldest inventory first. Farley sold 1,500 units, all from the beginning inventory of 3,000 units at $5 each, resulting in a cost of goods sold of 1,500 units x $5 = $7,500.

The Farley Corporation Starts the Year with a Beginning Inventory