Question

Strodse Company reported the following purchases and sales of its only product. Strods uses a perpetual inventory system. Determine the cost assigned to cost of goods sold using FIFO. Date Activities Units Acquired at Cost Units Sold at Retail May 1 Beginning Inventory 250 units @ $10 5 Purchase 270 units @ $12 10 Sales 190 units @ $20 15 Purchase 150 units @ $13 24 Sales 140 units @ $21 Multiple Choice: a) $3,590 b) $7,690 c) $3,460 d) $4,230 e) $4,100.

Answer 1

Answer: c) $3,460

Explanation:

The 190 units that were sold were part of 250 units inventory in stock as @May 1.

The cost price of the 250 units was $10 per units. Therefore, the total cost of 190 units sold = 190 x 10 = $1,900.

Secondly, the 140 units that were sold on May 24 comprises 60 units of the 250 units with cost price of $10 per unit and 80 units of the 270 units with cost price $12.

Therefore, total cost of 60 units = 60 x 10 = $600

And total cost of 80 units = 80 x 12 = $960

The total cost of goods sold = $1,900 + $600 + $960  

= $3,460

The cost assigned to cost of goods sold using FIFO is $3,460