1) Beech Soda Inc. uses a perpetual inventory system. The company\'s beginning i

Question

1) Beech Soda Inc. uses a perpetual inventory system. The company's beginning inventory of a particular product and its purchases during the month of January                     were as follows:Quantity Unit Cost Total Cost Beginning inventory (Jan. 1) 16 $ 10 $ 160 Purchase (Jan. 11) 14 12 168 Purchase (Jan. 20) 23 15 345 Total 53 $                     673 On January 14, Beech Soda Inc. sold 25 units of this product. The other 28 units remained in inventory at January 31. Refer to the above data. Assuming                     that Beech Soda uses the LIFO flow assumption, the 28 units of this product in inventory at January 31 have a total cost of : a. $400 b. $395 c. $405 d. $410

Explanation / Answer

After the sale of 25 units, there are 16+14-25=5 units remaining. The cost of this = 5*10=$50 (as this follows LIFO assumption). The cost of the other 23 units purchased on Jan 20 = $ 345.

So total cost of inventory = 50+345 = $ 395

Answer is choice (b) - $395.

Hope this helped ! Let me know in case of any queries.

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