At the end of January, Mineral Labs had an inventory of 775 units, which cost $12 per unit to produce. During February, the company produced 900 units at a cost of $16 per unit.(a) If the firm sold 1,500 units in February, what was the cost of goods sold, assuming LIFO inventory accounting?(b) If the firm sold 1,500 units in February, what was the cost of goods sold, assuming FIFO inventory accounting?

Results are below.

Explanation:

Giving the following information:

Beginning inventory= 775 units for $12 each

Production= 900 units for $16 per unit.

Units sold= 1,500

A) Using LIFO (last-in, first-out), the cost of goods sold is calculated using the cost of the last units incorporated into inventory.

COGS= 900*16 + 600*12= $21,600

B) Using FIFO (first-in, last-out), the cost of goods sold is calculated using the cost of the first units incorporated into inventory.

COGS= 775*12 + 715*16= $20,740

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