Perpetual Inventory Using FIFO Beginning inventory, purchases, and sales for Item B901 are as follows: May 1 Inventory 63 units @ $25 9 Sale 49 units 13 Purchase 60 units @ $29 25 Sale 18 units Assuming a perpetual inventory system and using the first-in, first-out (FIFO) method, determine (a) the cost of merchandise sold on May 25 and (b) the inventory on May 31. a. Cost of merchandise sold on May 25 b. Inventory on May 31 Feedback Check My Work 482 X 1,508 X a. When the FIFO method is used, costs are included in cost of merchandise sold in the order in which they were purchased. Think of your Inventory in terms of "layers." Determine how much inventory remains from each layer after each sale. b. The ending inventory is made up of the most recent purchases.