compute gross profit using the lifo inventory costing method. gross profit using the lifo inventory costing…

compute gross profit using the lifo inventory costing method. gross profit using the lifo inventory costing method = transactions may 1, beginning merchandise inventory 24 tires @ $61 each may 11, purchase 6 tires @ $76 each may 23, sale 16 tires @ $83 each may 26, purchase 14 tires @ $86 each may 29, sale 17 tires @ $83 each

compute gross profit using the lifo inventory costing method. gross profit using the lifo inventory costing method = transactions may 1, beginning merchandise inventory 24 tires @ $61 each may 11, purchase 6 tires @ $76 each may 23, sale 16 tires @ $83 each may 26, purchase 14 tires @ $86 each may 29, sale 17 tires @ $83 each

Answer

Explanation:

Step1: Calculate total sales revenue

The total number of units sold is (16 + 17=33) units. Each unit is sold at $83. So the total sales revenue (R) is (R=(16 + 17)\times83=33\times83 = 2739).

Step2: Calculate cost of goods sold (COGS) using LIFO

For the May 23 sale of 16 units: We take from the most - recent purchase. First, we use the 6 units from the May 11 purchase at $76 each and then (16 - 6=10) units from the beginning inventory at $61 each. The cost for the May 23 sale (C_1) is (C_1=(6\times76)+(10\times61)=456 + 610=1066). For the May 29 sale of 17 units: We use 14 units from the May 26 purchase at $86 each and (17-14 = 3) units from the remaining beginning inventory. The cost for the May 29 sale (C_2) is (C_2=(14\times86)+(3\times61)=1204+183 = 1387). The total COGS (C) is (C = C_1+C_2=1066 + 1387=2453).

Step3: Calculate gross profit

Gross profit (P) is calculated as (P=R - C). Substituting (R = 2739) and (C = 2453), we get (P=2739-2453 = 286).

Answer:

286