Anton Co
Subject:AccountingPrice:3.87 Bought7
Anton Co. uses the perpetual inventory method. Anton purchased 400 units of inventory that cost $12.00 each. At a later date the company purchased an additional 600 units of inventory that cost $16.00 each. If Anton uses the FIFO cost flow method and sells 700 units of inventory, the amount of cost of goods sold will be:
A) $11,200.
B) $10,400.
C) $8,400.
D) $9,600.
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Answer:
D )
Step-by-Step explanation
Under the FIFO method the first purchased items are sold first.
Cost of goods sold under the FIFO method = 400 units from the first purchases + (700 units - 400 units) from additional purchases
= 400 units x $12.00 + ((700 units - 400 units) x $16.00)
= $4,800 + (300 units x $16.00)
= $4,800 + $4,800
= $9,600
