Question

Suppose a company produces it product in batches of 50 units. The cost of producing the product is:

Batch 1:  $10/unit

Batch 2: $12/unit

Batch 3: $14/unit

Batch 4: $16/unit.

The company receives orders totaling 120 units after producing its 4th batch.

How much will this company report for its Cost of Goods Sold if it uses the FIFO inventory costing method?

Enter your answer as a whole numbers with no commas and no dollar sign.

Answer 1

Cost of goods sold under FIFO = 50*$10+50*$12+20*$14 =	$            1,380
Explanation:
Under FIFO, the assumption is that the goods produced
earlier would be sold first. Hence, the first 50 units will
be from Batch 1 at a cost of $10 per unit, the second 50
from Batch 2 at a cost of $12 per unit and the balance 20
from Batch 3 at a cost of $14.