Fifo vs Lifo
618,876,000 (sales)
475,476,000 (cost of goods sold)
143,400,000 (gross profit)
102,112,000 (selling and admin expenses)
41,288,000 (income from operations)
24,712,000 (other expenses)
16,567,000 (income before income tax)
7,728,000 (income taxes)
8,848,000 (net income)


inventories.inventories are valued at the lower of cost or market and include material labor and produstion overhead costs. Inventories consisted of the following:

current year
27,512,000 (finished goods)
34,363,000 (raw materials and work in progress)
61,875,000
(5,263,000) (reduction to LIFO cost)
56,612,000

prior year
23,830,000 (finished goods)
33,244,000 (raw material or work in progress)
57,074,000
(3,993,000) (reduction to LIFO cost)
53,081,000


the last in first out LIFO method is used for determining thecost of lumber, veneer, microlan lumber, joints and open web joints. Approx 35 percent of inventories at the end of the current year were valued using the LIFO method. The first in first out FIFO method is used to determine the cost of all other inventories.


A. How much would income before taxes have been if FIFO costing had been used to value all inventories?






I know what LIFO is and what FIFO is and how to use
Beginning Inventory
+ Purchases
Cost of Goods Available for Sale
- Ending Inventory
Cost of Goods Sold

I do not understand how to find the cost of goods sold under FIFO without knowing what Beginning inventory, or purchases, or ending inventory are... can someone help?

I'll illustrate it for you..
Assumed: selling price for a pencil = $2

on January, A started to sell pencil in his store. At the beginning of the month he purchase 100 unit of pencils from its suppliers at price $1/unit. Since he just started to sell pencils, so at first he has no pencil in his inventory. Then, we could say at January the beginning inventory is 0, purchase is $1*100=$100, so COG available for sales is $100. At the end of the month, it turned out that he was able to sell 75 unit of pencils, so there are 25 unit of it that has not been sold. The 25 units would be recorded as ending inventory on the end of January.

The ending inventory for jan = Beginning inventory for February
On February, A decided to buy the pencil from other supplier, which offered lower price 75 cent/unit. Then, A purchase 50 unit of it on early February. So, A would have 75 units available to sale on that month, with two different purchase price ($1 & $0.75), it means there are two different margins from the selling of those pencils. Let's say he able to sell 50 units of pencils. If A wants to get a higher return, A would sell the pencils with higher margin, which he purchased at 75 cents, so his profit would be:
[([email protected])*50=$62.5]
But, if he implemented FIFO, then the first goods entered his inventory had to be sold first, which were the one he purchased @$1. So his profit would be:
[(($2-$1)*25)+($2-$0.75)*25)=61.25]