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    Panini69's Avatar
    Panini69 Posts: 1, Reputation: 1
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    #1

    Sep 17, 2018, 05:59 PM
    5. At the end of January, Higgins Data Systems had an inventory of 690 units, which c
    1. At the end of January, Higgins Data Systems had an inventory of 690 units, which cost $13 per unit to produce. During February, the company produced 1,030 units at a cost of $16 per unit.


    If the firm sold 1,190 units in February, what was its cost of goods sold? (Assume LIFO inventory accounting.)
    paraclete's Avatar
    paraclete Posts: 2,706, Reputation: 172
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    #2

    Sep 17, 2018, 08:09 PM
    LIFO last in first out, so you will have to assume a uniform rate of production, you cannot just say the 1030 units were sold first.

    daily rate of production 1030 /28 = 36 or 37
    daily sales rate 1190/28 =42 0r 43

    so you need to construct a model which demonstrates this

    on the first day COS is 546, on the second 671

    The simple answer of 530 units at the close of the month representing inventory at $13 cost is inaccurate just as assuming finished goods are not received until the end of the month is inaccurate as the old inventory is used away at 6 units a day but some inventory is added at the end of the day. What may be accurate to say is inventory consists of 524 unit at $13 and 6 units at $16 and base your calculations on this

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