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Sales during the year were 500 units. Beginning inventory was 250 units at a cost of $5 per unit. Purchase 1 was 400 units at $6 per unit. Purchase 2 was 200 units at $7 per unit. Cost of goods sold under the LIFO cost flow assumption (using a periodic inventory system) was:

Answer :

TomShelby

Answer:

COGS under LIFO:              $ 3,200

Explanation:

Beginning inventory was 250 units at a cost of $5 per unit. Purchase 2 was 200 units at $7 per unit.

Beginning 250 units at $5 = $ 1,250

1st P          400 units at $6 = $ 2,400

2nd P       200 units at $7 =  $ 1,400

Sales: 500 units

Under LIFO the first untis are ending inventory while the it sales the last units. Thus we must "grab" from the bottom row:

sales 500:

2nd P       200 units at $7 =  $ 1,400

500 - 200 = 300 additional units to grab

1st P          300 units at $6 = $ 1,800

COGS under LIFO:              $ 3,200

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