Tristan, Inc., uses the LIFO cost-flow assumption to value inventory. It began t

Question

Tristan, Inc., uses the LIFO cost-flow assumption to value inventory. It began the current year with 2,000 units of inventory carried at LIFO cost of $20 per unit. During the first quarter, it purchased 8,000 units at an average cost of $40 per unit and sold 9,500 units at $60 per unit.

b)

Assume the company expects to replace the units of beginning inventory sold in April at a cost of $45 per unit and expects inventory at year-end to be between 2,100 and 2,500 units. What amount of cost of goods sold should be recorded for the quarter ended March 31?

$335,000

$350,000

$380,000

$387,500

Explanation / Answer

Total units sold in First quarter = 9,500

On the basis of LIFO:

Cost of 8,000 units sold = 8,000 x 40 = $320,000

Cost of 1,500 units sold from beginning inventory = 1,500 x 20 = $30,000

Total cost of goods sold = 320,000 + 30,000 = $350,000

So correct option is $350,000

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