Question

The Boxwood Company sells blankets for $ 32.00 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.
Date Product Z Units Cost
May 01 Purchase 9 $15.00
May 10 Sale 5
May 17 Purchase 11 $17.00
May 20 Sale 6
May 23 Sale 3
May 30 Purchase 10 $21.00

Assuming that the company uses the perpetual inventory system, determine the cost of goods sold for the sale of May 20 using the FIFO inventory cost method.

(A) $177.00
(B) $162.00
(C) $94.00
(D) $98.00

Answer 1

Answer:

(C) $94.00

Explanation:

The computation of the cost of goods sold for the sale of May 20 is shown below:

= Remaining units × cost price + remaining units × cost price

= 4 units × $15 + 2 units × $17

= $60 + $34

= $94

The 4 units come from May 1 and May 10 i.e 9 units - 5 units = 4 units

And on May 20, the 6 units were sold out of which 4 units were sold at price of $15 and rest 2 units were sold at a price of $17