Question

Pacific Company starts the year with a beginning inventory of 3,700 units at $5 per unit. The company purchases 5,700 units at $4 each in February and 2,700 units at $6 each in March. Pacific sells 1,300 units during this quarter. Pacific has a perpetual inventory system and uses the FIFO inventory costing method. What is the cost of goods sold for the quarter

Answer 1

Answer:

$6,500

Explanation:

First In First out (FiFO) is an Inventory method which determines the inventory value and it requires that the unit purchased first will be sold first.

                                        Units     Cost           Value         Balance

Beginning Inventory      3,700      $5            $18,500      $18,500

February                      

Purchases                      5,700     $4             $22,800      $41,300

March                      

Purchases                      2,700     $6             $16,200      $57,500

Sale                                -1,300    $5             ($6,500)      $51,000

Cost of Goods sold is the cost of sold units on the basis of FIFO inventory costing method.