Question

Anton Co. uses the perpetual inventory system and FIFO cost flow method. During the year, Anton purchased 400 units of inventory that cost $12.00 each and then purchased an additional 600 units of inventory that cost $16.00 each. If Anton sells 700 units of inventory, what is the amount of cost of goods sold?A.$11,200.B.$10,400.C.$8,400.D.$9,600.

Answer 1

Answer:

Option (D) $9,600

Explanation:

Data provided in the question:

Initial units purchased = 400 @ $12.00 each

Additional units purchased = 600 @ $16.00 each

Number of units sold = 700

Now,

Using the FIFO cost flow method

Out of the 700 units sold,

units sold from Initial purchase will be 400 and the remaining units i.e (700 - 400) 300 units will be sold from the additional purchase

Thus,

Amount  of cost of goods sold

= ( 400 × $12 ) + ( 300 × $16 )

= $4,800 + $4,800

= $9,600

Hence,

Option (D) $9,600