Silect Ltd, a fabric manufacturer, began March with 73 metres of fabric that cost 23 per yard.
Question:
Silect Ltd, a fabric manufacturer, began March with 73 metres of fabric that cost €23 per yard. During the month, Silect made the following purchases:
On 31 March, the closing inventory consists of 60 metres of fabric.
Requie 1. Determine the closing inventory and cost-of-goods-sold amounts for March under (1) WAC, (2) FIFO, and (3) LIFO.
2. Explain why cost of goods sold is highest under LIFO. Be specific.
3. How much income tax would Silect save during the month by using LIFO versus FIFO? The income tax rate is 40%.
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Somshukla Chakraborty
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