Question: Day Company which uses the FIFO inventory method had 254 000

Day Company, which uses the FIFO inventory method, had 254,000 units in inventory at the beginning of the year at a FIFO cost per unit of $30. No purchases were made during the year. Quarterly sales information and two sets of end-of-quarter replacement cost figures follow:

The market decline in the first quarter under Case A was expected to be temporary, whereas under Case B the decline was expected to be nontemporary. Declines in other quarters were expected to be permanent.

Determine cost of goods sold for the four quarters under each case and verify the amounts by computing cost of goods sold using the lower-of-cost-or-market method applied on an annualbasis.

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  • CreatedMarch 13, 2015
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