Answer:
The Stevens Co.
The cost of goods sold under FIFO is:
$1,760.
Explanation:
a) Data and Calculations:
1/1/10 Beginning inventory 8 units at $100 = $800
3/1/10 Purchases 10 units at $120 = $1,200
5/1/10 Purchases 12 units at $110 = $1,320
Total Goods available 30 units $3,320
Ending inventory 14 units
Units sold 16
Under FIFO:
Ending inventory
5/1/10 Purchases 12 units at $110 = $1,320
3/1/10 Purchases 2 units at $120 = $240
Total value of ending inventory = $1,560
Cost of goods sold = cost of goods available for sale minus the cost of ending inventory
= $1,760 ($3,320 - 1,560)
or Cost of goods sold:
1/1/10 Beginning inventory 8 units at $100 = $800
3/1/10 Purchases 8 units at $120 = $960
Total value of cost of goods sold = $1,760
b) FIFO (FIrst-in, First-out) is a cost evaluation method that assumes that the first inventories recorded are the first to be sold. This implies that the cost of goods sold is determined from the earlier stock while the cost of the ending inventory is determined from the later stock.
