If a company has 100 units of inventory purchased at $10 each and 100 units purc

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Question: If a company has 100 units of inventory purchased at $10 each and 100 units purchased at $15 each, what is the cost of goods sold using LIFO if 150 units are sold?

Options:

$1,500
$1,750
$1,600
$1,650

Correct Answer: $1,750

Solution:

Using LIFO, the last 100 units sold are at $15 each and the next 50 units are at $10 each, resulting in a cost of goods sold of (100 * $15) + (50 * $10) = $1,750.

If a company has 100 units of inventory purchased at $10 each and 100 units purc

Practice Questions

If a company has 100 units of inventory purchased at $10 each and 100 units purchased at $15 each, what is the cost of goods sold using LIFO if 150 units are sold?

$1,500
$1,750
$1,600
$1,650

Questions & Step-by-Step Solutions

If a company has 100 units of inventory purchased at $10 each and 100 units purchased at $15 each, what is the cost of goods sold using LIFO if 150 units are sold?

Step 1: Identify the total inventory. The company has 100 units purchased at $10 each and 100 units purchased at $15 each.
Step 2: Determine the total number of units sold. The company sold 150 units.
Step 3: Apply the LIFO method. LIFO means 'Last In, First Out', so we sell the most recently purchased inventory first.
Step 4: Sell the last 100 units first. These units were purchased at $15 each.
Step 5: Calculate the cost for the last 100 units sold: 100 units * $15 = $1,500.
Step 6: Now, we have sold 100 units, and we need to sell 50 more units to reach a total of 150 units sold.
Step 7: The next 50 units sold will come from the inventory purchased at $10 each.
Step 8: Calculate the cost for the next 50 units sold: 50 units * $10 = $500.
Step 9: Add the costs from Step 5 and Step 8 to find the total cost of goods sold: $1,500 + $500 = $2,000.
Step 10: The final cost of goods sold using LIFO for 150 units sold is $2,000.

LIFO (Last In, First Out) – An inventory valuation method where the most recently purchased items are sold first.
Cost of Goods Sold (COGS) – The total cost of producing goods that were sold during a specific period.
Inventory Valuation – The method used to value inventory, which affects financial statements and tax calculations.

If a company has 100 units of inventory purchased at $10 each and 100 units purc

What’s inside this PDF?

If a company has 100 units of inventory purchased at $10 each and 100 units purc

Practice Questions

Questions & Step-by-Step Solutions

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