Answer:
Option A is correct.
Cost of goods sold for the month is 434$
Explanation:
Opining stock = 6 Masks*$8 Each = $48
Purchases = 41 Masks*$10 Each = $410
Closing stock = 3 Masks
Total number of masks sold = Opening stock+ Purchases - Closing stock
= 6+41 - 3 = 44 masks
As per LIFO method total sold units 44 Masks belongs to 41 of Purchased units and 3 units from opening stock.
Cost of goods sold as per LIFO = 3 Masks $8 Each+ 41 Masks*$10 Each
= $434
Answer:
The correct answer is $510 (not in the options)
Explanation:
Using the Last-in First-out (LIFO) method of inventory, the cost of the most recent goods purchased (or produced) are the first to be recorded as the cost of goods sold.
Therefore:
beginning stock = 8 masks at $10 each
additional purchase = 40 masks at $12 each
total inventory within the period = 40 + 8 = 48 masks
ending inventory = 5 masks.
Total good sold = Total inventory - ending inventory
= 48 - 5 = 43 masks
To calculate the cost of goods sold, under the LIFO method, you have to note that the out of the 43 masks sold, 40 of the most recent purchases will be sold first, after which, 3 addition goods from the beginning inventory will be sold. Hence cost of goods sold is calculated as:
from most recent purchase (at $12 each) = 40 × 12 = $480
from beginning inventory (at $10 each) = 3 × 10 = $30
∴ Total cost of goods sold = 480 + 30 = $510
unfortunately, $510 is not in any of the options.
