Question

The inventory data for an item for November are: Nov. 1 Inventory 20 units at $19 4 Sale 10 units 10 Purchase 30 units at $20 17 Sale 20 units 30 Purchase 10 units at $21 Using a perpetual system, what is the cost of merchandise sold for November if the company uses FIFO?

Answer 1

Answer:

=  $490

Explanation:

Under the First-in-First-Out  ( FIFO ) method of inventory valuation,  inventories are valued using the price of the earliest batch in stock until the batch is exhausted when the price of the next oldest batch is used and so on.

Date     sale units       Workings                         Value

              10                    10 × $19                              190

               20        (10 × $19)+( 10 × $20)                  390

The cost o he merchandise = $190 + $390

                                             =  $490