A company purchased 100 units for $30 each on January 31. It purchased 170 units for $25 each on February 28. It sold 170 units for $70 each from March 1 through December 31 If the company uses the first-in, first-out inventory costing method, what is the amount of Cost of Goods Sold on the income statement for the year ending December 31? (Assume that the company uses a perpetual inventory system.)
A) $3,000
B) $4,250
C) $4,750
D) $7,250
C .Number of units sold = 170 units. As FIFO is used, 100 units will be valued at $30 per unit (Jan 31 ) and remaining 70 units will be valued at $25 per unit (Feb 28.)
Cost of Goods Sold = ((100 units x $30 ) + (70 units x $25 )) = $3,000 + $1,750 = $4,750
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