Ace Auto Supply uses a perpetual inventory record. On March 10, the company sells two Shelby four-barrel carburetors. Immediately prior to this sale, the perpetual inventory records indicate three of these carburetors on hand, as shown below: With respect to the sale on March 10: (More than one of the following answers may be correct.)

Question

Quizplus · Accepted Answer

Since the company uses perpetual inventory record and there were three carburetors on hand prior to the sale, the cost of goods sold can be calculated using average cost method as follows:

Average cost per unit = (200+240+280)/3 = $240
Cost of goods sold = 2 x $240 = $480

B) is incorrect because specific identification method would only be used if the carburetors have unique identification numbers.
C) is incorrect because the method (LIFO or FIFO) used doesn't impact the cost of goods sold as the cost remains the same regardless of the method used.
D) is incorrect because the cost of the remaining carburetor would be based on the cost of the next purchase, not the cost of the carburetors sold.

Ace Auto Supply Uses a Perpetual Inventory Record