LIFO Method Example for Cost of Goods Sold Calculation

This video tutorial demonstrates the LIFO method using the Delta Company example. It begins with a setup similar to previous videos and explains the calculation of the cost of goods sold (COGS) using the LIFO method. The instructor details the process of expensing 29 units, starting with the most recent purchase, and completes the journal entry. The video concludes with the computation of gross profit and ending inventory, providing a comprehensive understanding of the LIFO method.

What does LIFO stand for in inventory management?

• Last In, First Out

• First In, Last Out

• First In, First Out

• Last In, Last Out

In the LIFO method, which purchase is used first to calculate the cost of goods sold?

• The most recent purchase

• The oldest purchase

• The purchase with the lowest cost

• The purchase with the highest cost

How many units were expensed in total using the LIFO method in this example?

• 16 units

• 29 units

• 22 units

• 7 units

What is the gross profit calculated in this example?

• $849

• $601

• $1,450

• $468

What is the total value of the ending inventory in this example?

• $243

• $225

• $468

• $849