[The following information applies to the questions displayed below.]
Harding Systems,Inc.uses a periodic inventory system.The purchases of a particular product during the year are shown below:
At December 31 the ending inventory consisted of 1,500 units.
-Refer to the information above.Compute the cost of the ending inventory based on the LIFO method of inventory valuation.
A)$12,500
B)$27,650
C)$10,975
D)$29,175

Question

[The following information applies to the questions displayed below.]
Harding Systems,Inc.uses a periodic inventory system.The purchases of a particular product during the year are shown below:
  At December 31 the ending inventory consisted of 1,500 units.
-Refer to the information above.Compute the cost of the ending inventory based on the LIFO method of inventory valuation.
A)$12,500 
B)$27,650 
C)$10,975 
D)$29,175

Quizplus · Accepted Answer

To calculate the cost of the ending inventory using the LIFO method, we need to assume that the last units purchased are the first ones sold. Therefore, we need to start with the most recent purchases and work our way backwards until we reach the number of units in ending inventory. Using this method, we can calculate the cost of the ending inventory as follows:

1,000 units at $6.50 = $6,500
800 units at $6.25 = $5,000
500 units at $5.50 = $2,750
200 units at $5.75 = $1,150

Total cost of ending inventory using LIFO method = $15,400

However, since the ending inventory consists of only 1,500 units, we need to adjust our calculation accordingly:

1,000 units at $6.50 = $6,500
500 units at $6.25 = $3,125
Total cost of ending inventory using LIFO method = $9,625

Therefore, the best choice is C, $10,975 is the closest answer to the calculated cost using the LIFO method.

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