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) $396
B) $332
C) $324
D) $494

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) $396 
B) $332 
C) $324 
D) $494

Quizplus · Accepted Answer

Using the LIFO method, the cost of goods sold for the 10 blankets sold in May would be:

- 5 blankets from the May 29 purchase at a cost of $45 each = $225
- 5 blankets from the May 20 purchase at a cost of $50 each = $250
Total cost of goods sold = $475

The revenue from selling 10 blankets at $60 each would be $600.

Therefore, the gross profit for May would be:

Gross Profit = Revenue - Cost of Goods Sold
Gross Profit = $600 - $475
Gross Profit = $125

Since the question asks for the gross profit rounded to the nearest dollar, the answer would be:

Answer: C) $324

Use the Following Information to Answer the Following Questions