A company has the following inventory purchases: 50 units at $10, 100 units at $12, and 150 units at $15. If it sells 200 units using FIFO, what is the cost of goods sold?
Practice Questions
1 question
Q1
A company has the following inventory purchases: 50 units at $10, 100 units at $12, and 150 units at $15. If it sells 200 units using FIFO, what is the cost of goods sold?
$2,200
$2,400
$2,600
$2,800
Under FIFO, the cost of goods sold for the first 200 units sold is (50 * $10) + (100 * $12) + (50 * $15) = $500 + $1,200 + $750 = $2,450.
Questions & Step-by-step Solutions
1 item
Q
Q: A company has the following inventory purchases: 50 units at $10, 100 units at $12, and 150 units at $15. If it sells 200 units using FIFO, what is the cost of goods sold?
Solution: Under FIFO, the cost of goods sold for the first 200 units sold is (50 * $10) + (100 * $12) + (50 * $15) = $500 + $1,200 + $750 = $2,450.
Steps: 8
Step 1: Identify the inventory purchases. The company has three purchases: 50 units at $10 each, 100 units at $12 each, and 150 units at $15 each.
Step 2: Understand FIFO (First In, First Out). This means the first items purchased are the first ones sold.
Step 3: Start selling the units. The company needs to sell 200 units.
Step 4: Sell the first 50 units from the first purchase. Cost = 50 units * $10 = $500.
Step 5: Sell the next 100 units from the second purchase. Cost = 100 units * $12 = $1,200.
Step 6: Now, we have sold 150 units (50 + 100). We need to sell 50 more units from the third purchase.
Step 7: Sell 50 units from the third purchase. Cost = 50 units * $15 = $750.
Step 8: Add up all the costs to find the total cost of goods sold. Total Cost = $500 + $1,200 + $750 = $2,450.
