Solution and Explanation:
Purchased
Date Description Units Value Per unit cost
1st august Purchase 300 1560 5.20
12th august Purchase 400 2340 5.85
24th august Purchase 400 2520 6.30
30th august Purchase 300 1980 6.60
Total 1400 8400
The Closing quantity = 500
The number of Units that have been sold = 900
Value of inventory as per First in first out ( FIFO) method is calculated as follows
[tex](200 * 6.30)+(300 * 6.60)[/tex] = 3240
Therefore, the answer is $3240.
LIFO inventory method produces the lowest gross profit for August.
Explanation:
Applying the FIFO inventory method, the total value of the company's closing inventory as on August 31 stands at $3,240.
Applying the LIFO inventory method, the cost of goods sold stands at $5,670 (for August month).
