Answer:
Phantom profit= $500
Explanation:
Giving the following information:
Purchased: 230 units for $8
Purchased: 330 units for $9
Purchased: 270 units for $10.
At the end of the month, 310 units remained.
The method with the highest ending inventory will result in the lowest cost of goods sold.
First, we need to calculate the ending inventory under FIFO method.
FIFO (first-in, first-out):
Ending inventory= 270*10 + 40*9= $3,060
Now, we calculate the ending inventory under the LIFO method and compare it with FIFO.
LIFO (last-in, first-out)
Ending inventory= 230*8 + 80*9= $2,560
Phantom profit= 3,060 - 2,560= $500
