The Divine Merchandising Corporation began March operations with merchandise inv

Question

The Divine Merchandising Corporation began March operations with merchandise inventory of 6 units, each of which cost $27. During March, Divine Merchandising made the following purchases: (1) March 4, 12 units @ $28 per unit, (2) March 15, 18 units @ $30 per unit, (3) March 26, 14 units @ $32 per unit. During March the Divine Merchandising Company sold the following units at a sales price of $48 per unit: March 6, 11 units, March 20, 17 units, and March 28, 12 units. Operating expenses in March were $640. The Company estimates its income taxes expense will be approximately 35% of income before taxes.

Using the LIFO perpetual inventory method, determine the cost of goods sold during March.

$1,202

$1,920

$1,166

$1,486

$1,324

a.

$1,202

b.

$1,920

c.

$1,166

d.

$1,486

e.

$1,324

Explanation / Answer

a. $1,202

LIFO Method: cost of goods available for sale Cost of Goods Sold Units $/Unit $$ Units $/Unit $$ Beginning inventory 6 27 162 Purchases 4-Mar 12 28 336 0 6-Mar 11 28 308 15-Mar 18 30 540 0 20-Mar 17 30 510 26-Mar 14 32 448 0 28-Mar 12 32 384 Total 50 1486 40 1202

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