On May 5, a firm purchased 20 units of materials at a unit price of $2.20. On May 15, the firm purchased 35 units at a unit price of $2.45. If the firm uses the LIFO method of inventory pricing, the total cost of 30 units issued on May 20 would be:

Question

Quizplus · Accepted Answer

Under the LIFO (Last In, First Out) method, the most recently purchased items are issued first. Therefore, for the 30 units issued on May 20, the cost calculation would be as follows: 35 units were purchased on May 15 at $2.45 each. All 30 units issued would come from this batch. So, 30 units x $2.45 = $73.50.

On May 5, a Firm Purchased 20 Units of Materials