Question

Required information [The following information applies to the questions displayed below.) Causwell Company began 2021 with 15,000 units of inventory on hand. The cost of each unit was $5.00. During 2021 an additional 35,000 units were purchased at a single unit cost, and 25,000 units remained on hand at the end of 2021 (25,000 units therefore were sold during 2021). Causwell uses a periodic inventory system. Cost of goods sold for 2021, applying the average cost method, is $142,500. The company is interested in determining what cost of goods sold would have been if the FIFO or LIFO methods were used. Required: 2. Determine the cost of goods sold for 2021 using the LIFO method. (Do not round intermediate calculations.) LIFO cost of goods sold

Answer 1

Calculate purchase cost per unit for 35000 units

Average cost of goods sold = (15000*5+35000*X)/50000*25000

142500 = 75000+35000X/50000*25000

142500 = 1.50+0.70X*25000

142500 = 37500+17500X

X = 6

Cost of goods sold under LIFO = 25000*6 = 150000