Vargas Company Uses the Perpetual Inventory System and the FIFO

question 39

Multiple Choice

Vargas Company uses the perpetual inventory system and the FIFO cost flow method.During the current year,Vargas purchased 400 units of inventory that cost $15.00 each.At a later date during the year,the company purchased an additional 800 units of inventory that cost $18.00 each.Vargas sold 500 units of inventory for $27.00.What is the amount of cost of goods sold that will appear on the current year's income statement?

• A)$7,800
• B)$6,000
• C)$4,500
• D)$5,700

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Definitions:

Hourly Wage Rate

The amount of money paid for each hour of work.

Opportunity Cost

The cost of the next best alternative forgone as a result of making a decision.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods.

Marginal Product

The increase in output that results from employing one more unit of a factor of production.