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company purchased 200 units for $40 each on January 31. It purchased 115 units for $50 each on February 28. It sold 175 units for $65 each from March 1 through December 31. If the company uses the lastminus−​in, firstminus−out inventory costing​ method, what is the amount of Cost of Goods Sold on the income statement for the year ending December​ 31? (Assume that the company uses a perpetual inventory​ system.)

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DavidBusiness

Answer:

$8150

Explanation:

As the perpetual inventory system used for determining the Cost of Goods Sold is LIFO (lastminus-in, firstminus-out), we should consider that the first goods sold are the ones purchased last. So, from the total of 175 units sold, 115 are the ones purchased later (at a $50 cost) and 60 belong to the units purchased first (at $40 cost).

So to determine the total Cost of Goods Sold is 50*115+60*40= $8150