Nichols Company had 400 units of "Dink" in its inventory at a cost of $6 each.It purchased 600 more units of "Dink" at a cost of $9 each.Nichols then sold 700 units at a selling price of $15 each.The LIFO liquidation overstated normal gross profit by

Question

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LIFO liquidation overstates normal gross profit by the amount of the increase in the cost of the units sold under LIFO over the cost of the units sold under FIFO. In this case, the cost of the units sold under LIFO is $9 per unit, while the cost of the units sold under FIFO is $6 per unit. Therefore, the LIFO liquidation overstates normal gross profit by $3 per unit, or $300 in total.

Nichols Company Had 400 Units of "Dink" in Its Inventory