Romanoff Industries had the following inventory transactions occur during 2015: $\begin{array}{llll}&&\text { Units }&\text { Cost/unit }\
2 / 1 / 15 & \text { Purchase } & 54 & \$ 45 \
3 / 14 / 15 & \text { Purchase } & 93 & \$ 47 \
5 / 1 / 15 & \text { Purchase } & 66 & \$ 49
\end{array}$ The company sold 150 units at $70 each and has a tax rate of 30%. Assuming that a periodic inventory system is used, what is the company's after-tax income using LIFO? (rounded to whole dollars)

Question

Quizplus · Accepted Answer

Using LIFO, the cost of goods sold is calculated using the most recent purchases first: (66 units x $49) + (84 units x $47) = $7,182. Sales revenue is 150 units x $70 = $10,500. Gross profit is $10,500 - $7,182 = $3,318. After-tax income is $3,318 x (1 - 0.30) = $2,323.

Romanoff Industries Had the Following Inventory Transactions Occur During 2015