1) Different FIFO inventory assumptions:
Beginning inventory of 10 units @ $5 = $50
Purchases month #1 of 10 units @ $15= $150
Purchases month #2 of 10 units @ $10 = $100
Cost of goods available for sale (subtotal) = $300
Less ending inventory of 10 units
Equals cost of goods sold (also known as cost of sales)
Cost of goods sold or cost of sales = $200
Sales equal $500 and operating expenses equal $50.
What is the earnings before tax (EBT) amount?
A. $350
B. $300
C. $250
D. None of these is correct.