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The Xu Corporation uses a periodic inventory system. The company has a beginning inventory of 1,550 units at $18 each on January 1. Xu purchases 1,800 units at $17 each in February and 850 units at $19 each in March. There were no additional purchases or sales during the remainder of the year. Xu sells 1,600 units during the quarter. If Xu uses the LIFO method, what is its cost of goods sold?

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Answer:

Cost of goods sold= $28,900

Explanation:

Giving the following information:

Beginning inventory= 1,550 units at $18

February= 1,800 units at $17

March= 850 units at $19

Xu sells 1,600 units during the quarter.

To calculate the cost of goods sold under LIFO (last-in, first-out) we will use the cost of the last units incorporated to inventory:

Cost of goods sold= 850*19 + 750*17= $28,900