Using the LIFO method, if a company has inventory costs of $20, $25, and $30, an

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Question: Using the LIFO method, if a company has inventory costs of $20, $25, and $30, and sells 2 units, what is the cost of goods sold?

Options:

Correct Answer: $45

Solution:

Under LIFO, the cost of goods sold for the last 2 units sold is $30 + $25 = $55.

Using the LIFO method, if a company has inventory costs of $20, $25, and $30, and sells 2 units, what is the cost of goods sold?

Using the LIFO method, if a company has inventory costs of $20, $25, and $30, and sells 2 units, what is the cost of goods sold?

Step 1: Understand that LIFO stands for 'Last In, First Out'. This means that the last items added to inventory are the first ones to be sold.
Step 2: Identify the inventory costs. In this case, the costs are $20, $25, and $30.
Step 3: Since we are selling 2 units, we will take the last two costs from the inventory list.
Step 4: The last cost is $30 (the most recent item), and the second last cost is $25.
Step 5: Add these two costs together to find the total cost of goods sold: $30 + $25 = $55.

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