Question

Serene Stereos has the following inventory data:
Nov. 1 Inventory 22 units @ $4.40 each
8 Purchase 89 units @ $4.75 each
17 Purchase 44 units @ $4.65 each
25 Purchase 67 units @ $4.90 each
A physical count of merchandise inventory on November 30 reveals that there are 74 units on hand. Cost of goods sold under FIFO is
a. $709.
b. $361.
c. $692.
d. $344.

Answer 1

Answer:

correct option is c. $692

Explanation:

given data

Nov 1 Inventory 22 units @ $4.40 each

8 Purchase 89 units @ $4.75 each

17 Purchase 44 units @ $4.65 each

25 Purchase 67 units @ $4.90 each

to find out

Cost of goods sold under FIFO

solution

we know here unit sold are

Units sold = ( 22 + 89 + 44 + 67 - 74 ) units

unit sold = 148 units

so

goods purchased first is sold off first

so 22 units will be sold off first costing $4.4 each

and balance is = ( 148 - 22 ) = 126 units

and 89 units will  sold off costing = $4.75 each

so that balance is =   126-89 =37 units

that will  sold off costing $4.65 each

so

we know as per FIFO  

Cost of goods sold  will be here = (22 units @ $4.4 ) + ( 89 units @ $4.75 ) + (37 units @ $4.65 )

Cost of goods sold = $692

correct option is c. $692