Lowery Company uses a perpetual inventory system. The following information is available for the month of March:

-Refer to the information provided for Lowery Company. If the company uses the LIFO inventory costing method, how much is cost of goods sold for the month of March?

Question

Lowery Company uses a perpetual inventory system. The following information is available for the month of March:
 
-Refer to the information provided for Lowery Company. If the company uses the LIFO inventory costing method, how much is cost of goods sold for the month of March?

Quizplus · Accepted Answer

Using the LIFO method, the cost of goods sold is calculated by starting with the most recent inventory costs and working backwards. The cost of the 6 units sold on March 10 would be $18 ($3 per unit) and the cost of the 4 units sold on March 15 would be $12 ($3 per unit), for a total cost of goods sold of $30. The cost of the 6 units purchased on March 17 would be $24 ($4 per unit), and the cost of the 5 units remaining in inventory would be $20 ($4 per unit). Adding together the cost of goods sold and the cost of the remaining inventory yields a total cost of $50. Subtracting the cost of the remaining inventory from the total cost yields the cost of goods sold for the month, which is $30.

Lowery Company Uses a Perpetual Inventory System