The following set of facts apply to Widgets Inc: Assume that Widgets Inc. uses t

Question

The following set of facts apply to Widgets Inc:

Assume that Widgets Inc. uses the FIFO inventory method to calculate COGS. The amount of COGS that would be calculated for the FIRST 200 units sold under FIFO would be (rounded to the nearest dollar)?

$ 233

$ 270

$ 248

$ 273

Units Price paid
per unit Total Beginning inventory January 1st 2009: 50 $ 1.00 $ 50 Purchase on January 10th 2009 100 $ 1.20 $ 120 Purchase on January 15th 2009 80 $ 1.25 $ 100 Sold 200 units for $ 1.50 each $ 300 Purchase on January 25th 2009 150 $ 1.40 $ 210 Sold 50 units for $ 1.75 each $87.50

Explanation / Answer

Option A = 232.5 = $ 233 FIFO cost of goods sold Ending inventory of unit Average cost per unit Cost of Average goods available for sale of unit Average cost per unit cost of goods sold of unit Average cost per unit Ending inventory Beginning inventory 50 1 50 Purchase Jan-05 100 1.2 120 Jan-15 80 1.25 100 Sold   50 1 50 100 1.2 120 50 1.25 62.5 30 1.25 37.5 Total 200 232.5

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