Question

Pacific Company starts the year with a beginning inventory of 4,400 units at $7 per unit. The company purchases 6,400 units at $6 each in February and 3,400 units at $8 each in March. Pacific sells 1,650 units during this quarter. Pacific has a perpetual inventory system and uses the FIFO inventory costing method. What is the cost of goods sold for the quarter? Multiple Choice $11,550 $9,900 $12,375 $13,200

Answer 1

Question - 1

Answer : A = $ 11550.

FIFO Method

>> In FIFO Method goods first purchased will be sold first. So,

>> Cost of Goods sold = 1650 * $ 7 = $ 11550.

Question - 2

Answer : A = $ 94

FIFO Method - Periodic method

>> In FIFO Method goods first purchased will be sold first. So,

>> Total Letters purchased A thru R = 18 Letters.

>> Sold A, D ,E , H, J and N = Total 6 Letters.

>> Closing inventory = 18 - 6 = 12 Letters.

>> Closing inventory = ( 6 * $ 8.5 ) + ( 5 * $ 7.5 ) + ( 1 * 5.5 ) = $ 94.