Posted by Anonymous on .
3) A firm has beginning inventory of 300 units at a cost of $11 each. Production during the period was 650 units at $12 each. If sales were 700 units, what is the value of the ending inventory using LIFO?
LIFO = Last In First Out.
Whatever you just bought, or made, is what you sell next.
If I start with 5 units @$10,
then buy 7 @$20,
then sell 10,
which 10 do I sell?
I sell the _last_ 10 that I got, which will be the 7@$20 and 3 of the 5 @$10.
That will leave me with the first two I bought, which I valued @ $10 each.
Now look at your question again. Which 700 were sold? Which 250 were left?
It is B. $2,750