Question

A firm that uses a periodic inventory system sells a single product that had a beginning inventory of 4,300 units with a total cost of $30,100. Early in the

year, 10,100 units were purchased at $9 each and 3,000 units were on hand at the end of the year. Using FIFO, what is the amount of Cost of Goods
Sold?
Multiple Choice
$101,500
$80,900
$94,000
$100,000

Answer 1

Using FIFO, the amount of Cost of Goods Sold is $94,000.

Step-by-step explanation:

In a periodic inventory system using the FIFO method, the cost of goods sold is calculated by matching the cost of the oldest units in inventory with the units sold first. To calculate the cost of goods sold using FIFO, we start by subtracting the beginning inventory cost from the total cost of units purchased during the year. In this case, the units purchased during the year totaled ($9/unit x 10,100 units) = $90,900. Next, we subtract the value of the ending inventory ($9/unit x 3,000 units) = $27,000. Finally, we add the beginning inventory cost to the difference: $30,100 + ($90,900 - $27,000) = $94,000.