Causwell Company began 2011 with 10,000 units of inventory on hand. The cost of each unit was $5.00. During 2011 an additional 30,000 units were purchased at a single unit cost, and 20,000 units remained on hand at the end of 2011 (20,000 units therefore were sold during 2011). Causwell uses a periodic inventory system. Cost of goods sold for 2011, applying the average cost method, is $115,000. The company is interested in determining what cost of goods sold would have been if the FIFO or LIFO methods were used.
Required:
1. Determine the cost of goods sold for 2011 using the FIFO method. [Hint: Determine the cost per unit of 2011 purchases.]
2. Determine the cost of goods sold for 2011 using the LIFO method.