Question

A company just starting business made the following four inventory purchases in June:

June 1 150 units $ 390
June 10 200 units 585
June 15 200 units 630
June 28 150 units 510 $
2,115
A physical count of merchandise inventory on June 30 reveals that there are 250 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for June is:________
a. $683.
b. $825.
c. $1,290.
d. $1,432.

Answer 1

c. $1,290

Step-by-step explanation:

FIFO assumes that the units to arrive first are the first to be sold. This means that the cost of sales is based earlier prices.

Step 1 : Units Sold

Units Sold =Units available for sale - Units in Inventory

= 700 - 250

= 450

Step 2 : Cost of Sales

Cost of Sales = $390 + $585 + 100/200 x $630

= $390 + $585 + $315

= $1,290

Using the FIFO inventory method, the amount allocated to cost of goods sold for June is $1,290