Vango, Inc. sells part number 86z to auto parts stores around the world. Informa

Question

Vango, Inc. sells part number 86z to auto parts stores around the world. Information about part number 86Z is contained in the table below. Vango uses a FIFO periodic inventory system.

2000         *           8.0    = 16,000

3,000        *          8.2    = 24,600

5,000         *           8.6    = 43,000

+___________________________

10,000                            = 83600

Determine the cost of goods sold and ending inventory value of part 86z, if 4000 units remain unsold at the end of the accounting period

A.            Cost of goods sold is $34,440 and ending inventory is $49,200

B.            Cost of goods sold is $51,200 and ending inventory is $32,400

C.            Cost of goods sold is $50,160 and ending inventory is $33,440

D.            Cost of goods sold is $49,200 and ending inventory is $34,400

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Total Units Available = 10000

Less Total Units Sold = 6000

Units Unsold = 4000

Cost of Goods Sold (Calculated for Units Available) = 2000*8 (From First Lot) + 3000*8.2 (From Second Lot) + 1000*8.6 (From Third Lot) = 49200

Ending Inventory = 4000*8.6 (From Third Lot) = 34400

Option D (Cost of goods sold is $49,200 and ending inventory is $34,400) is the correct answer.

Thanks.

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