At the end of January, Mineral Labs had inventory of 725 units, which cost $10 per unit to produce. During February the company produced 650 units at a cost of $14 per unit. If the firm sold 1,000 units in February, what was the cost of goods sold?

a. Assume LIFO inventory accounting.
b. Assume FIFO inventory accounting.

To determine the cost of goods sold (COGS) using LIFO (last-in, first-out) or FIFO (first-in, first-out) methods, we need to understand the inventory flow and pricing.

1. LIFO (Last-In, First-Out) Method:
Under the LIFO method, we assume that the latest units produced are sold first. Therefore, the cost associated with the last units produced is considered as the cost of goods sold.

To calculate COGS using LIFO:
a. Determine the total cost of units produced during February, which is 650 units * $14 per unit = $9,100.
b. Since we assume LIFO, the cost of goods sold would be based on the 650 units produced in February, considering the latest units at a higher cost.
COGS = 650 units * $14 per unit = $9,100.

2. FIFO (First-In, First-Out) Method:
Under the FIFO method, we assume that the earliest units produced are sold first. Therefore, the cost associated with the first units produced is considered as the cost of goods sold.

To calculate COGS using FIFO:
a. Determine the total cost of units produced during February, which is 650 units * $14 per unit = $9,100.
b. Determine the number of units from the previous inventory that were sold. In this case, it is the difference between the units produced in January and the ending inventory of January: 725 units - 0 units (since there is no information regarding units sold in January) = 725 units.
c. Calculate the cost of goods sold based on the 725 units from the previous inventory:
COGS = 725 units * $10 per unit = $7,250.
d. Add the cost of goods sold from February's production to the previous inventory cost:
COGS = $7,250 + $9,100 = $16,350.

So, the cost of goods sold would be:
a. Using LIFO: $9,100.
b. Using FIFO: $16,350.