Chapter 2: 13BP_b (page 115)

At the end of January, Mineral Labs had an inventory of 775 units, which cost $12 per unit to produce. During February, the company produced 900 units at a cost of $16 per unit. If the firm sold 1,500 units in February, what was the cost of goods sold?
b. Assume FIFO inventory accounting.

Short Answer

Expert verified

Cost of goods sold of the company is $20,900.

Step by step solution

FIFO inventory accounting method

FIFO accounting method is defined as the valuation method in which the products produced or acquired first are sold or used first. It is method of managing the inventory.

Cost of goods sold

$\begin{array}{rcl} Cost of goods sold & = & Units \times Cost per unit \\ = & (775 \times $ 12) + ((1, 500 - 775) \times $ 16) \\ = & $ 20, 900 \end{array}$

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Stud Clothier
Balance sheet 20X1
Assets		Liabilities and Equity
Cash	\)60,000	Account payable	\(220,000
Account receivable	240,000	Accrued taxes	30,000
Inventory	350,000	Bonds payable (long term)	150,000
Plant and equipment	410,000	Common stock	80,000
		Paid in capital	200,000
		Retained earnings	380,000
Total assets	\)1,060,000	Total LIbilities and Equity	$1,060,000

Lancaster corporation
Sales	\(246,000
Cost of goods sold	122,000
Gross profit	\)124,000
Fixed charges (other than interest)	27,500
Income before interest and taxes	\(96,500
Interest	21,800
Income before taxes	\)74,700
Taxes (35%)	26,145
Income after taxes	$48,555

At the end of January, Mineral Labs had an inventory of 775 units, which cost \(12 per unit to produce. During February, the company produced 900 units at a cost of \)16 per unit. If the firm sold 1,500 units in February, what was the cost of goods sold?
b. Assume FIFO inventory accounting.

Short Answer

Step by step solution

FIFO inventory accounting method

Cost of goods sold

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Most popular questions from this chapter

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At the end of January, Mineral Labs had an inventory of 775 units, which cost \(12 per unit to produce. During February, the company produced 900 units at a cost of \)16 per unit. If the firm sold 1,500 units in February, what was the cost of goods sold?b. Assume FIFO inventory accounting.

Short Answer

Step by step solution

FIFO inventory accounting method

Cost of goods sold

One App. One Place for Learning.

Most popular questions from this chapter

Recommended explanations on Business Studies Textbooks

Managers

Change Management

Human Resources

Operational Management

Influences On Business

Organizational Communication

Study anywhere. Anytime. Across all devices.

At the end of January, Mineral Labs had an inventory of 775 units, which cost \(12 per unit to produce. During February, the company produced 900 units at a cost of \)16 per unit. If the firm sold 1,500 units in February, what was the cost of goods sold?
b. Assume FIFO inventory accounting.