Question

Vargas Company uses the perpetual inventory system and the FIFO cost flow method. During the current year, Vargas purchased 1,000 units of inventory that cost $11 each. At a later date during the year, the company purchased an additional 1,400 units of inventory that cost $12 each. Vargas sold 1,100 units of inventory for $15. What is the amount of cost of goods sold that will appear on the current year’s income statement?

Answer 1

Answer: $12,200

Explanation:

Cost of goods sold:

1000 units * $11 = $11,000

100 units * $ 12 = $ 1,200

Total cost of goods sold ($11,000 + 1,200) = $12,200