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?
Practice Questions
1 question
Q1
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
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.
Questions & Step-by-step Solutions
1 item
Q
Q: 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?
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.
Steps: 10
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.
