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Beech Soda,Inc.uses a perpetual inventory system.The company's beginning inventory of a particular product and its purchases during the month of January were as follows:
On January 14,Beech Soda,Inc.sold 25 units of this product.The other 28 units remained in inventory at January 31.
-Assuming that Beech Soda uses the LIFO cost flow assumption,the 28 units of this product in inventory at January 31 have a total cost of:
A)$400.
B)$395.
C)$405.
D)$410.

Question

[The following information applies to the questions displayed below.]
Beech Soda,Inc.uses a perpetual inventory system.The company's beginning inventory of a particular product and its purchases during the month of January were as follows:
  On January 14,Beech Soda,Inc.sold 25 units of this product.The other 28 units remained in inventory at January 31.
-Assuming that Beech Soda uses the LIFO cost flow assumption,the 28 units of this product in inventory at January 31 have a total cost of:
A)$400. 
B)$395. 
C)$405. 
D)$410.

Quizplus · Accepted Answer

Using LIFO, we assume that the last units purchased are the first ones sold. Therefore, we need to calculate the cost of the 28 units that were not sold, which were the ones purchased on January 29 at a cost of $15 per unit. So, 28 units x $14 = $392. Adding the beginning inventory of $3, we get a total cost of $395.

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