Question

Coronado Industries sells one product and uses a perpetual inventory system. The beginning inventory consisted of 77 units that cost $19 per unit. During the current month, the company purchased 476 units at $19 each. Sales during the month totaled 355 units for $45 each. What is the cost of goods sold using the LIFO method

Answer 1

Answer:

$6745

Explanation:

Given: Beginning inventory is 77 units at the cost of $19 per unit.

            Purchased inventory is 476 units at $19 per unit.

            Sales during the month is 355 units at $45 per unit.

Now, let´s find the cost of goods sold using LIFO method.

We know, LIFO method is Last in first out, which sell out inventory, which are most recently purchased. In a period of rising prices, LIFO inventory method tends to give the highest reported cost of goods sold.

As sales unit is 355 units.

Let´s take units from recent purchased inventory.

Cost of good sold= $355\ units\times 19= \ 6745$

Hence, the cost of goods sold using the LIFO method is $6745.