Question

Cement Company, Inc. began the first quarter with 1,000 units of inventory costing $25 per unit. During the first quarter, 3,000 units were purchased at a cost of $40 per unit, and sales of 3,400 units at $65 per units were made. During the second quarter, the company expects to replace the units of beginning inventory sold at a cost of $45 per unit. Cement Company uses the LIFO method to account for inventory. Please provide detailed calculation.


The amount of gross profit for the first quarter is:


A.


$83,000


B.


$87,000


C.


$90,000


D.


$221,000


E.


$250,000

Answer 1

Answer:

The correct answer is C.

Explanation:

Giving the following information:

Cement Company, Inc. began the first quarter with 1,000 units of inventory costing $25 per unit.

During the first quarter, 3,000 units were purchased for $40 per unit.

Sales of 3,400 units at $65 per unit were made.

LIFO (last-in, first-out)

COGS= 3,000*40 + 400*25= 130,000

Sales= 3,400*65= 221,000

COGS= (130,000)

Gross profit= 91,000