Summertime had the following data for the month of March: At March 31,300 units are still on hand.Determine the cost of goods sold for March if Summertime uses the FIFO method.

Question

Summertime had the following data for the month of March:  At March 31,300 units are still on hand.Determine the cost of goods sold for March if Summertime uses the FIFO method.

Quizplus · Accepted Answer

To determine the cost of goods sold, we need to use the FIFO method. FIFO assumes that the first units purchased are the first ones sold.

Using the information given, we can calculate the cost of goods sold as follows:

Cost of goods sold = Cost of beginning inventory + Cost of purchases - Cost of ending inventory

Cost of beginning inventory = 120 units x $35 = $4,200

Cost of purchases = 1,180 units x $40 = $47,200

Cost of ending inventory = 300 units x $40 = $12,000

Therefore,

Cost of goods sold = $4,200 + $47,200 - $12,000 = $39,400

So, the answer is C) $8,804.

Summertime Had the Following Data for the Month of March