Question

In its first month of operations, Vaughn Manufacturing made three purchases of merchandise in the following sequence:

Answer 1

Answer:

$Ending\ Inventory = \ 1920$ --- FIFO

$Ending\ Inventory = \ 1200$ -- LIFO

Explanation:

Solving (a):

FIFO method

This means that the first items to be listed were sold out and only 240 of the last item is left

This implies that the following units were sold

340 units at $5; 440 units at $7 and (540 - 240) units at $8

So: We're left with

$Ending\ Inventory = 240 * \ 8$

$Ending\ Inventory = \ 1920$

Solving (b):

LIFO method

This means that the last items to be listed were sold out and only 240 of the fist item is left

This implies that the following units were sold

540 units at $8; 440 units at $7 and (340 - 240) units at $5

So: We're left with

$Ending\ Inventory = 240 * \ 5$

$Ending\ Inventory = \ 1200$