Question

SlickCo, which uses the periodic method and FIFO costing, begins operations in 20X1 and makes the following purchases during 20X1 and 20X2:

- 20X1 : March, Units : 450, Unit Cost : $3.00
- 20X1 : August, Units : 650, Unit Cost : $3.50
- 20X2 : February, Units : 550, Unit Cost : $4.00
- 20X2 : October, Units : 250, Unit Cost : $5.00
If SlickCo sells 900 units in 20X1 and again in 20X2, the COGS for 20X2 will be:

O $2,975
O $2,925
O $3,800
O $3,450
O $3,650

Answer 1

To calculate SlickCo's COGS for 20X2 using the periodic FIFO method, we start with the remaining inventory from 20X1, add the new inventory from 20X2, and then apply the sales. The total COGS for 20X2 is $3,650.

Step-by-step explanation:

The correct option : 5

To calculate the Cost of Goods Sold (COGS) for SlickCo in 20X2 using the periodic FIFO method, we need to first determine what inventory is left after sales in 20X1 and then apply the FIFO logic to the 20X2 sales.

In 20X1, SlickCo purchased 450 units at $3.00 each in March and 650 units at $3.50 each in August, totaling 1,100 units. SlickCo sold 900 units in 20X1. Using the FIFO method, the first 450 units sold would come from the March purchase and the remaining 450 units from the August purchase:

Total COGS for 20X1 would be $1,350 + $1,575 = $2,925. This leaves 200 units from the August purchase at $3.50 each for the starting inventory of 20X2.

During 20X2, SlickCo purchased additional inventory:

To calculate the COGS for the 900 units sold in 20X2:

The total COGS for 20X2 is $700 + $2,200 + $750 = $3,650.