Question

Bramble Corp. uses the periodic inventory system. For the current month, the beginning inventory consisted of 483 units that cost $66 each. During the month, the company made two purchases: 723 units at $69 each and 358 units at $71 each. Bramble Corp. also sold 1201 units during the month. Using the LIFO method, what is the amount of cost of goods sold for the month?

Answer 1

Answer)

Facts of the question:

	Number of units	Cost per unit	Total Cost
Beginning Inventory	483	$                     66	$   31,878
Purchased	723	$                     69	$   49,887
Purchased	358	$                     71	$   25,418
Total	1,564		107,183

Under LIFO method using periodic inventory system, cost of goods sold and value of ending inventory is calculated on the assumption that units of inventory which are latest bought will be sold first and moving backwards. Accordingly cost of goods sold will be from the latest bought units.

In the given question, the company has sold 1,201 units. Out of these 358 units and 723 will be from the purchases made during the period and balance 120 units will be from the units in the beginning inventory.

	Number of units	Cost per unit	Total Cost
Beginning Inventory	120	$                     66	$      7,920
Purchased	723	$                     69	$   49,887
Purchased	358	$                     71	$   25,418
Total	1,201		$ 83,225

Therefore cost of goods sold will be $ 83,225.