Question

Beech Soda, Inc. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January were as follows: Quantity Unit Cost Total Cost Beginning inventory (Jan. 1) 16 $ 10 $ 160 Purchase (Jan. 11) 14 $ 12 168 Purchase (Jan. 20) 23 $ 15 345 Total 53 $ 673 On January 14, Beech Soda, Inc. sold 25 units of this product. The other 28 units remained in inventory at January 31.Assuming that Beech Soda uses the average cost flow assumption, the cost of goods sold to be recorded at January 14 is (round your intermediate calculation to one decimal place and cost per unit to the nearest cent):

Answer 1

Solution The first in, first out (FIFO) method of inventory valuation is a cost flow assumption that the first goods purchased are also the first goods sold. In the Given Question The sales are made On Jan 14. So we have Two Sets Of inventory with us on the date of sale 1. Opening Inventory 2. Purchases Made on Jan 11. So As per FIFO the Opening Stock will be sold first and then we will sell the Purchases Made on jan QTY Rate On Jan 14. First 16 Units next 9 Units 16 9 Amount ($) 10 160 12 108 Cost Of Goods Sold 268