Question

Irwin Industries had the following inventory transactions occur during the current year: Units Cost/unit Feb. 1 Purchase 40 $42 Mar. 14 Purchase 60 $43 May 1 Purchase 45 $44 The company sold 100 units at $80 each and has a tax rate of 25%. Assuming that a periodic inventory system is used and operating expenses are $1,000, what is the company’s gross profit using LIFO? (rounded to whole dollars)

Answer 1

Answer:

gross profit = $3655

Explanation:

solution

by using the LIFO

cost of goods and sold includes last inventory purchases

that is new inventory

so

sales revenue = 100 units × $80

sales revenue = $8000

cost of goods sold = ( 45 units × $44 ) + ( ( 100 - 45 ) units × $43 )

cost of goods sold = 1980 + 2365 = $4345

and

gross profit is here

gross profit = sales revenue - cost of good sold

gross profit = $8000 - $4345

gross profit = $3655