Question

Quench, a bottled water supplier, has 5,496 bottles of water in their warehouse at the end of April. One third of the bottles were purchased in February at a cost of $1.00 per bottle. Another third were purchased in the month of March at a cost of $1.25 per bottle. The remaining third were purchased in April at a cost of $1.75 per bottle. The warehouse sold and shipped 4,925 bottles during May. Quench uses FIFO to value their inventory. What was the Cost of Sales related to the bottles shipped in May?

Answer 1

Answer:

COGS 6,786.75

Explanation:

First, We calculate the beginning inventory:

5,496 x 1/3 = 1,832 bottles x $1 February =  $  1,832

5,495 x 1/3 = 1,832 bottles x $1.25 March = $  2,748

5,495 x 1/3 = 1,832 bottles x $1.75 April    = $  3,206

Second, We  start subtract the first units from the sales until get zero

sales 4,925

        -1,832 february bottles                 1,832

         3,093

        -1,832 march bottles                    2,748

         1,261

        -1,261 April bottles x 1.75 =          2,206.75

               0

Third, we add them to get the COGS

COGS 6,786.75