Biscuit Bakery had the following activity in its inventory account during August 20X3. $\begin{array}{lllcc}
\text { Date } & \text { Activity } & \text { Units } & \begin{array}{c}
\text { Cost per } \
\text { Unit Cost }
\end{array} & \text { Total } \
\hline \text { August 1 } & \text { Beginning inventory } & 100 & \$ 3.00 & \$ 300 \
\text { August 3 } & \text { Purchase } & 40 & 3.10 & 124 \
\text { August 7 } & \text { Sale } & 50 & & \
\text { August 12 } & \text { Purchase } & 50 & 3.20 & 160 \
\text { August 16 } & \text { Sale } & 70 & & \
\text { August 23 } & \text { Sale } & 40 & & \
\text { August 30 } & \text { Purchase } & 60 & 3.30 & 198
\end{array}$ What is the cost of goods sold for the month ended August 31,20X3,for Biscuit Bakery if the company uses perpetual LIFO as its inventory valuation method?
A)$344
B)$482
C)$494
D)$502
E)$542

Question

Quizplus · Accepted Answer

Using perpetual LIFO, the cost of the 40 units sold on August 7 is $3.10 per unit, the cost of the 70 units sold on August 16 is $3.20 per unit, and the cost of the 40 units sold on August 23 is $3.30 per unit. The cost of goods sold for the month is therefore:
Cost of goods sold = (40 x $3.10) + (70 x $3.20) + (40 x $3.30) = $124 + $224 + $132 = $494. Answer: C.

Biscuit Bakery Had the Following Activity in Its Inventory Account