A company had 8 units at a cost of $12 each in inventory on November 1. On November 2, the company purchased 13 units at $13 each. On November 6, the company purchased 9 units at $14 each. On November 8, the company sold 24 units for $57 each. Given this information, determine the cost of the 6 units remaining in inventory after the November 8 sale using the LIFO periodic inventory method.
A)$78
B)$319
C)$336
D)$72
E)$84

Question

Quizplus · Accepted Answer

Using the LIFO method, we assume that the last units purchased are the first ones sold. So, we first subtract the 24 units sold from the purchases made on November 2 and November 6. This gives us a total of 13+9=22 units remaining in inventory.

Out of the 22 units, the 6 remaining units would be the last ones purchased. That means we need to take the cost of the 9 units purchased on November 6 and the 3 units purchased on November 2 (since 6 < 9) to find the cost of the 6 remaining units.

Cost of 9 units purchased on November 6 = 9 x 14 = $126
Cost of 3 units purchased on November 2 = 3 x 13 = $39
Total cost of 6 units = 6 x 14 (last purchase cost) = $84

Therefore, the cost of the 6 units remaining in inventory after the November 8 sale is $84. The answer is (D).

A Company Had 8 Units at a Cost of $12