Beginning inventory of 50 units, purchased at $5
50 units purchased at $10
35 units purchased at $9
25 units sold at $15
70 units sold at $12
Tax rate = 40%.
Beginning LIFO reserve = $300 -
The net income using FIFO is ________.
Click on the arrows to vote for the correct answer
A. B. C. D.C
The total revenue equals 25*15 + 70*12 = 1,215, coming from a sale of 95 units. Under FIFO, the goods purchased earliest are assumed to have been sold first.
Therefore, 50 of the sold units have a cost of $5 each and 45 units have a cost of $10 each. Therefore, FIFO COGS = 50*5 + 45*10 = $700. Therefore, assuming no other costs, the pre-tax income equals 1,215 - 700 = $515 and the post tax income equals 515*(1-40%) = $309.