Question

Chess top uses the periodic inventory system. for the current month, the beginning inventory consisted of 360 units that cost $65 each. during the month, the company made two purchases: 540 units at $68 each and 270 units at $70 each. chess top also sold 900 units during the month. using the lifo method, what is the amount of cost of goods sold for the month?

Answer 1

Given: Beginning inventory 360 units @ $65 each  
Purchase:
 1. 540 units @ $68 each
 2. 270 units @ $70 each 
 Sales: 900 units  
 To calculate: cost of goods sold as per LIFO method (Last In First Out). 
 LIFO = stock coming in last will go out first. 
 Solution:- Cost of goods sold is calculated as follows: 
 270 units @ $70 each = 270*70 = $18900
 540 units @ $68 each = 540*68 = $36720 
 900 - (270+540) = 90 units
 remaining 90 units will be sold from inventory at the beginning 
 90 units @ $65 each = 90*65 = $5850 
 So, total cost of goods sold = $ (18900+36720+5850) = $61470.