Consider the following facts: - Company A begin business operations in the month

Question

Consider the following facts:

- Company A begin business operations in the month of April.

- On April 1, it purchased 150 units of goods for $390.

- On April 10, it purchased 200 units of goods for $585.

- On April 15, it purchased 200 units of goods for $630.

- On April 28, it purchased 150 units of goods for $510.

- At the end of the month, it discovered that it had 200 units on hand after completing its physical inventory count.

- Company A uses the FIFO inventory accounting method.

Company A's cost of goods sold for April is:

None of these answers are correct

$536

$1,564

$668

$1,447

Explanation / Answer

COGS (UNITS) = BEGINNING UNITS + PURCHASES - ENDING UNITS

   = 0 + (150+200+200+150) - 200

= 500 UNITS

COMPANY USES FIFO ACCOUNTING METHOD

COGS = 150 UNITS FOR $390 (390/150 = 2.6 PER UNIT)

200 UNITS FOR $585 (585/200 = 2.925 PER UNIT)

150 UNITS FOR $472.5 (630/200 = 3.15 PER UNIT)

THUS, 500 UNITS FOR $1447.5

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