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Widget Company started the month with 10 gadgets in its Inventory that cost $5 each. During the month, Widget bought 50 more gadgets that cost $6 each. At the end of the month, Widget counted its inventory and found that 8 gadgets remained unsold. If Widget uses FIFO, its Cost of Goods Sold for the month is ______.Multiple choice question.$48$40$310$302$252

Question

Widget Company started the month with 10 gadgets in its Inventory that cost 5each.Duringthemonth,Widgetbought50moregadgetsthatcost5 each. During the month, Widget bought 50 more gadgets that cost 6 each. At the end of the month, Widget counted its inventory and found that 8 gadgets remained unsold. If Widget uses FIFO, its Cost of Goods Sold for the month is ______.Multiple choice question.484840310310302$252

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Solution

To calculate the Cost of Goods Sold (COGS) using the FIFO (First-In, First-Out) method, we need to consider the cost of the items in the order they were purchased.

  1. Widget Company started with 10 gadgets at 5each,sothecostis10∗5 each, so the cost is 10 * 5 = $50.
  2. Then, they bought 50 more gadgets at 6each,sothecostis50∗6 each, so the cost is 50 * 6 = $300.
  3. At the end of the month, 8 gadgets remained unsold. Since we're using FIFO, these would be the last gadgets bought, so they would be from the 6batch.Thecostoftheunsoldgadgetsis8∗6 batch. The cost of the unsold gadgets is 8 * 6 = $48.

The COGS is the cost of the starting inventory plus the cost of the items bought, minus the cost of the unsold items. So, COGS = 50+50 + 300 - 48=48 = 302.

So, the Cost of Goods Sold for the month is $302.

This problem has been solved

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