Question

Character Company, which uses the perpetual inventory method, purchases different letters for resale. Character had a beginning inventory comprised of six units at $3 per unit. The company purchased three units at $5 per unit in February, sold six units in October, and purchased three units at $6 per unit in December. If Character Company uses the LIFO method, what is the cost of goods sold for the year?

Multiple Choice
a.$33
b.$27
c.$51

Answer 1

The cost of goods sold for the year using the LIFO method is $51.

Step-by-step explanation:

The cost of goods sold for the year can be calculated by using the LIFO (last in, first out) method. In this method, we assume that the most recent purchases are sold first. Based on the information given, the cost of goods sold can be calculated as follows:

Beginning inventory: 6 units at $3 per unit = $18

Purchase in February: 3 units at $5 per unit = $15

Purchase in December: 3 units at $6 per unit = $18

Total cost of goods sold = $18 + $15 + $18 = $51

Therefore, the correct answer is (c) $51.