A company had inventory of 5 units at a cost of $20 each on November 1. On November 2, they purchased 10 units at $22 each. On November 6, they purchased 6 units at $25 each. On November 8, they sold 18 units for $54 each. Using the LIFO perpetual inventory method, what was the cost of the 18 units sold?
A)$395
B)$410
C)$450
D)$510
E)$520

Question

Quizplus · Accepted Answer

Using the LIFO (last-in, first-out) perpetual inventory method, we assume that the last units purchased are the first ones sold.

On November 8, they sold 18 units, which consist of the 6 units purchased on November 6 and 12 out of the 10 units purchased on November 2.

Therefore, the cost of the 12 units sold from November 2 is: 
12 units x $22 per unit = $264

The cost of the 6 units sold from November 6 is: 
6 units x $25 per unit = $150

Adding these two costs together, we get:

$264 + $150 = $414

So, the cost of the 18 units sold is $414. Therefore, the correct answer is B) $410.

A Company Had Inventory of 5 Units at a Cost