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) $520
B) $570
C) $450
D) $470
E) $490

Question

Quizplus · Accepted Answer

Using FIFO perpetual inventory method, the cost of the 22 units sold would be based on the cost of the oldest 22 units in the inventory.

The 10 units purchased on March 1 at $20 each would be the oldest, followed by 10 units purchased on March 2 at $22 each, and 6 units purchased on March 6 at $25 each.

Therefore, the cost of the 22 units sold would be calculated as follows:

10 units x $20 = $200
10 units x $22 = $220
2 units x $25 = $50

Total cost of the 22 units = $470

Therefore, the best choice is D, $470.

A Company Had Beginning Inventory of 10 Units at a Cost