Use the following information to answer the following questions. The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.
Assuming that the company uses the perpetual inventory system, determine the Gross Profit for the month of May using the LIFO cost method
A) $348
B) $452
C) $444
D) $356

Question

Use the following information to answer the following questions. The Boxwood Company sells blankets for $60 each. The following was taken from the inventory records during May. The company had no beginning inventory on May 1.
 Assuming that the company uses the perpetual inventory system, determine the Gross Profit for the month of May using the LIFO cost method
A) $348 
B) $452 
C) $444 
D) $356

Quizplus · Accepted Answer

Using the LIFO cost method, we need to assume that the latest purchases are sold first. Therefore, the cost of goods sold for the month of May would be: 
- 5 units purchased on May 5th for $40 each = $200 
- 7 units purchased on May 15th for $50 each = $350 
Total cost of goods sold = $550

To determine the gross profit, we need to subtract the cost of goods sold from the total revenue: 
Total revenue = $60 x 15 units sold in May = $900 
Gross profit = $900 - $550 = $350

Therefore, the correct answer is C.

Use the Following Information to Answer the Following Questions