If a company sells 150 units of inventory using LIFO, with the most recent purchases at $10, $12, and $15, what is the total cost of goods sold?

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Q: If a company sells 150 units of inventory using LIFO, with the most recent purchases at $10, $12, and $15, what is the total cost of goods sold?

Solution: Under LIFO, the cost of goods sold for the last 150 units sold is (100 units at $15) + (50 units at $12) = $1,500 + $600 = $2,100.

Steps: 9

Step 1: Identify the most recent purchase prices of the inventory, which are $15, $12, and $10.
Step 2: Under LIFO (Last In, First Out), we sell the most recently purchased items first.
Step 3: Start selling from the most recent purchase: Sell 100 units at $15 each.
Step 4: Calculate the cost for the 100 units sold at $15: 100 units * $15 = $1,500.
Step 5: Now, we have sold 100 units, and we need to sell 50 more units to reach a total of 150 units.
Step 6: The next most recent purchase is at $12. Sell 50 units at $12 each.
Step 7: Calculate the cost for the 50 units sold at $12: 50 units * $12 = $600.
Step 8: Add the total costs from both sales: $1,500 (from the first sale) + $600 (from the second sale) = $2,100.
Step 9: The total cost of goods sold is $2,100.