Panini69 Posts: 1, Reputation: 1 New Member #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 Posts: 2,706, Reputation: 172 Ultra Member #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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