Answer:
A. 3000 units x $7 = $21000
Explanation:
FIFO (First-In-First-Out) is a method of inventory valuation where the stock that is purchased first is used first. In other words, the oldest stock is used first. This is common for perishable items which if not used up fast, will be wasted.
Jan 01 - Beginning inventory : 5000 units x $9 = $45000
Jun 18 - Purchases : 4500 units x $8.20 = $36900
Nov 08 - Purchases : 3000 units x $7 = $21000
Total inventory = 5000 + 4500 + 3000 = 12,500 units
Ending inventory = 3,000 units
Hence, inventory sold = 9,500 units
The cost of goods sold using FIFO:
5000 units x $9 = $45000
4500 units x $8.20 = $36900
COGS = $45000 + $36900 = $81900 (9500 units)
Ending inventory :
3000 units x $7 = $21000 (3000 units)
