Answer:
Company’s after-tax income using LIFO would be $3,982
Explanation:
Revenues: 265 * $131 = $34,715
To calculate the cost of the units sold using LIFO you have to use the cost of the last purchases.
For this case it would be:
114 units * $102 + 151 units * $ 98 = $26,426
Once we have the gross profit (deducting the cost from the net sales), we have to deduct the expenses to obtain the net profit before taxes.
$34,715 net sales
-
$26,426 LIFO cost of goods
-----------
$8,289 gross profit
-
$2,600 expenses
----------
$5,689 net profit before taxes
$1,707 (30% TAX)
----------
$3,982 net income
To have the total income we have to deduct the tax that is calculated mutiplying the net income before tax by the taxe rate.
