Winter Fun, Inc., had the following data for the month of March: At March 31, 301 units are still on hand. Determine the cost of goods sold for March if Winter Fun uses the FIFO method.

Question

Winter Fun, Inc., had the following data for the month of March:  At March 31, 301 units are still on hand. Determine the cost of goods sold for March if Winter Fun uses the FIFO method.

Quizplus · Accepted Answer

To calculate cost of goods sold (COGS) using FIFO method, we need to assume that the first units purchased are the first units sold. Here is the breakdown of units sold and their respective costs:

- March 5: Sold 120 units at $30 each = $3,600 (cost of goods sold = 120 x $25 = $3,000)
- March 14: Sold 160 units at $32 each = $5,120 (cost of goods sold = 160 x $25 = $4,000)
- March 22: Sold 220 units at $35 each = $7,700 (cost of goods sold = 201 x $25 + 19 x $27 = $4,780)
- Total cost of goods sold for March = $3,000 + $4,000 + $4,780 = $11,780
- Since we have 301 units remaining, we need to subtract their cost from the total cost of goods sold: $11,780 - (301 x $25) = $8,782

Therefore, the best choice is C) $8,782.