A firm that sells a single product had a beginning inventory of 9,000 units with a total cost of
$45,000. Early in the year, 15,000 units were purchased at $6 each. Using LIFO, what is the value of the ending inventory of 4,000 units?

Question

Quizplus · Accepted Answer

Under LIFO (Last-In, First-Out), the most recently purchased items are sold first. The firm ends the year with 4,000 units in inventory. These would be from the beginning inventory, as all 15,000 units purchased would have been sold first. The beginning inventory was 9,000 units at a total cost of $45,000, or $5 per unit. Therefore, the value of the ending inventory (4,000 units) is 4,000 units * $5/unit = $20,000.

A Firm That Sells a Single Product Had a Beginning