Question

June 4

June 11
June 18
June 25
A. $2.26
C. $2.10
Units
Received
70
30
60
40
Unit
Cost
You sell 100 units in
$2.00 June. Calculate the cost
of goods sold using
first-in, first-out.
$3.00
$2.10
$2.40
B. $2.22
D. $2.30

Answer 1

D. $2.30

Step-by-step explanation:

To put it simply, if it is First-In First-Out (FIFO) method, meaning, whatever comes first, it would be sold first. FIFO method have to start by determining the cost of the oldest inventory.

So logically speaking, if:

June 4 = 70 units × $2.00 = $140

June 11 = 30 units × $3.00 = $90

Total cost for the first 100 units = $140 + $90 = $230

Since the units sold in June is 100 units, therefore:

Cost of Goods Sold = Total cost / Total units

= $230 / 100 units

= $2.30 per unit

Hope it helps. Thanks!