Question

Tobi Foods grocery began the year with 300 boxes of cookies with a unit cost of $1.89. During the year, the following additional purchases were made:

Jan 1: 200 boxes at $2.10 each
Feb 1: 400 boxes at $2.20 each
Mar 1: 250 boxes at $2.40 each

At the end of the year, Tobi foods grocery had 475 boxes of cookies on the shelf and in the back room. Assuming LIFO, calculate the following.

(a) cost of ending inventory
(b) cost of goods sold

Answer 1

we know that

The first-in-first-out method (FIFO), states that the earliest costs (first costs) are assigned to cost of goods sold and the remaining costs (the more recent costs) are assigned to ending inventory.

The FIFO method assumes that the earliest-goods purchased are sold first.

so

in this problem

Part a) cost of ending inventory

Find the total cost

Total cost=200*$2.1+400*$2.2+250*$2.4=$1,900

Find the cost of ending inventory

475-250=225 boxes

Cost of ending inventory=225*$2.20+250*$2.40=$1,095

therefore

the answer Part a) is

The cost of ending inventory is $1,095

Part b) cost of goods sold

we know that

The cost of goods sold is equal to the total cost minus the cost of ending inventory

so

cost of goods sold=$1,900-$1,095=$805

therefore

the answer part b) is

The cost of goods sold is $805