The Divine Merchandising Corporation began March operations with merchandise inv

Question

The Divine Merchandising Corporation began March operations with merchandise inventory of 6 units, each of which cost $27. During March, Divine Merchandising made the following purchases: (1) March 4, 12 units @ $28 per unit, (2) March 15, 18 units @ $30 per unit, (3) March 26, 14 units @ $32 per unit. During March the Divine Merchandising Company sold the following units at a sales price of $48 per unit: March 6, 11 units, March 20, 17 units, and March 28, 12 units. Operating expenses in March were $640. The Company estimates its income taxes expense will be approximately 35% of income before taxes.

Using the FIFO inventory method, determine the cost of goods available for sale during March.

$162

$1,324

$284

$1,486

$320

$162

$1,324

$284

$1,486

$320

Explanation / Answer

Cost of goods sold available for sale refers to closing stock available at the end of the month. It is to be determined as follows.

Here, company is following FIFE method so closing stock units available =10 units

Cost of goods sold =10*32

   =$ 320

Closing stock determination based on FIFO

Note:sale of 40 units made 10 units out of opening stock and 30 units out of purchases made and remaining 10 closing would be out of purchases made on March 27)

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.