Accounting: Cost of Goods Sold Question

Question

The Farley Corporation starts the year with a beginning inventory of 4,400 units at $7 per unit. The company purchases 6,400 units at $6 each in February and 3,400 units at $8 each in March. Farley sells 1,650 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?

$9,900
$13,200
$11,550
$12,375

Answer 1

They use FIFO so the units on hand the longest are sold first.

That means they sold 1650 units at a purchase cost of $7 each.

 

That is 1650(7) = $11,550

Answer 2

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