Question

Oriole Company has the following inventory data:

July 1 Beginning Inventory 45 units at $22 $990 7 Purchases 157 units at $24 3768 22 Purchases 22 units at $25 550 $5308
A physical count of merchandise inventory on July 30 reveals that there are 56 units on hand. Using the FIFO inventory method, the amount allocated to cost of goods sold for July is:______.
a. $3774.
b. $3908.
c. $4054.
d. $3942.

Answer 1

$3,942

Step-by-step explanation:

Step 1 : Determine number of units sold

Units Sold = Total units available for sale - Units remaining in inventory

= (45 + 157 + 22) - 56

= 168 units

Step 2 : Determine Cost of goods sold

FIFO assumes that the units to arrive first will be sold first.

Cost of goods sold = (45 units x $22) + (123 units x $24)

= $3,942

The amount allocated to cost of goods sold for July is: $3,942