Question

Chess top uses the periodic inventory system. for the current month, the beginning inventory consisted of 360 units that cost $65 each. during the month, the company made two purchases: 540 units at $68 each and 270 units at $70 each. chess top also sold 900 units during the month. using the lifo method, what is the amount of cost of goods sold for the month?

Answer 1

Given: Beginning inventory 360 units @ $65 each
Purchase:
1. 540 units @ $68 each
2. 270 units @ $70 each
Sales: 900 units
To calculate: cost of goods sold as per LIFO method (Last In First Out).
LIFO = stock coming in last will go out first.
Solution:- Cost of goods sold is calculated as follows:
270 units @ $70 each = 270*70 = $18900
540 units @ $68 each = 540*68 = $36720
900 - (270+540) = 90 units
remaining 90 units will be sold from inventory at the beginning
90 units @ $65 each = 90*65 = $5850
So, total cost of goods sold = $ (18900+36720+5850) = $61470.