Chapter 2: 13BP_a (page 115)

At the end of January, Mineral Labs had an inventory of 775 units, which cost $12 per unit to produce. During February, the company produced 900 units at a cost of $16 per unit. If the firm sold 1,500 units in February, what was the cost of goods sold?
a. Assume LIFO inventory accounting.

Short Answer

Expert verified

Cost of goods sold of the company is $21,600.

Step by step solution

LIFO inventory accounting method

LIFO accounting method is defined as the valuation method in which the products produced or acquired last are sold or used first. This method is rarely used by the companies.

Cost of goods sold

$\begin{array}{rcl} Cost of goods sold & = & Units \times Cost per unit \\ = & (900 \times $ 16) + ((1, 500 - 900) \times $ 12) \\ = & $ 21, 600 \end{array}$

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Stud Clothier
Balance sheet 20X1
Assets		Liabilities and Equity
Cash	\)60,000	Account payable	\(220,000
Account receivable	240,000	Accrued taxes	30,000
Inventory	350,000	Bonds payable (long term)	150,000
Plant and equipment	410,000	Common stock	80,000
		Paid in capital	200,000
		Retained earnings	380,000
Total assets	\)1,060,000	Total LIbilities and Equity	$1,060,000

	20X1	20X2
Sales	\(3,230,000	\)3,370,000
Cost of goods sold	2,130,000	2,850,000
Gross profits	\(1,100,000	\)520,000
Selling and administrative expenses	298,000	227,000
Operating profits	\(802,000	\)293,000
Interest expense	47,200	51,600
Income before taxes	\(754,800	\)241,400
Taxes (35%)	264,180	84,490
Income after tax	\(490,620	\)156,910

At the end of January, Mineral Labs had an inventory of 775 units, which cost \(12 per unit to produce. During February, the company produced 900 units at a cost of \)16 per unit. If the firm sold 1,500 units in February, what was the cost of goods sold?
a. Assume LIFO inventory accounting.

Short Answer

Step by step solution

LIFO inventory accounting method

Cost of goods sold

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Most popular questions from this chapter

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Study anywhere. Anytime. Across all devices.

At the end of January, Mineral Labs had an inventory of 775 units, which cost \(12 per unit to produce. During February, the company produced 900 units at a cost of \)16 per unit. If the firm sold 1,500 units in February, what was the cost of goods sold?a. Assume LIFO inventory accounting.

Short Answer

Step by step solution

LIFO inventory accounting method

Cost of goods sold

One App. One Place for Learning.

Most popular questions from this chapter

Recommended explanations on Business Studies Textbooks

Managers

Business Case Studies

Strategic Direction

Business Operations

Introduction to Business

Nature of Business

Study anywhere. Anytime. Across all devices.

At the end of January, Mineral Labs had an inventory of 775 units, which cost \(12 per unit to produce. During February, the company produced 900 units at a cost of \)16 per unit. If the firm sold 1,500 units in February, what was the cost of goods sold?
a. Assume LIFO inventory accounting.