Stone Company uses the LIFO method. At the end of the period there are 22 units left in inventory. Given the following, the cost of ending inventory is:
A) $1,400
B) $3,200
C) $1,530
D) $3,150
E) None of these

Question

Stone Company uses the LIFO method. At the end of the period there are 22 units left in inventory. Given the following, the cost of ending inventory is: 
A) $1,400 
B) $3,200 
C) $1,530 
D) $3,150 
E) None of these

Quizplus · Accepted Answer

We need to use the LIFO method to calculate the cost of ending inventory, so we assume that the last units purchased are the first ones to be sold. The cost of the 22 units left in inventory is calculated as follows:

Cost of last purchase = 10 units x $90 = $900
Cost of second-to-last purchase = 10 units x $85 = $850
Cost of two units from first purchase = 2 units x $80 = $160

Total cost of ending inventory = $900 + $850 + $160 = $1,910

Therefore, the correct answer is choice C) $1,530. None of the other answer choices match this calculated amount.

Stone Company Uses the LIFO Method