Question

Lauer Corporation uses the periodic inventory system and has provided the following information about one of its laptop computers:

Date	Transaction	Number of Units				Cost per Unit
1/1	Beginning Inventory		110			$	810
5/5	Purchase		210			$	910
8/10	Purchase		310			$	1,010
10/15	Purchase		205			$	1,060

During the year, Lauer sold 775 laptop computers.
What was cost of goods sold using the LIFO cost flow assumption?

Answer 1

Under LIFO (Last in first out), the units that were purchased last or most recent purchases will be sold first. 775 units sold were as below:

From most recent purchase on 10/ 15: 205 units @ $1060 = $217300

From next recent purchase on 8 / 10: 310 units @ $1010 = $313100

From next recent purchase on 5/ 5: 210 units @ $910 = $191100

From most recent purchase on 1/ 1: Remaining 50 (i.e. out of 775 sold) units @ $810 = $40500

Total cost of goods sold = $217300 + $313100 + $191100 + $40500 = $762000

So, Cost of goods sold = $762000