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23 August, 05:13

Anton Co. uses the perpetual inventory system and FIFO cost flow method. During the year, Anton purchased 400 units of inventory that cost $12.00 each and then purchased an additional 600 units of inventory that cost $16.00 each. If Anton sells 700 units of inventory, what is the amount of cost of goods sold? A.$11,200. B.$10,400. C.$8,400. D.$9,600.

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  1. 23 August, 06:38
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    Option (D) $9,600

    Explanation:

    Data provided in the question:

    Initial units purchased = 400 @ $12.00 each

    Additional units purchased = 600 @ $16.00 each

    Number of units sold = 700

    Now,

    Using the FIFO cost flow method

    Out of the 700 units sold,

    units sold from Initial purchase will be 400 and the remaining units i. e (700 - 400) 300 units will be sold from the additional purchase

    Thus,

    Amount of cost of goods sold

    = (400 * $12) + (300 * $16)

    = $4,800 + $4,800

    = $9,600

    Hence,

    Option (D) $9,600
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