Question

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

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

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