Answer:
Thus, difference in gross profit = $144 + $144 = $288
Profit as per FIFO is higher than profit as per LIFO
Explanation:
In the given case, as per both the methods computation shall be as follows:
Date Quantity Rate Amount
Mar 1 22 units $29 $638
Jun 16 31 units $30 $930
Nov 28 41 units $37 $1,517
Total 94 units $3,085
Closing units = 18
That means sales = 94 - 18 = 76 units
Thus as per LIFO cost = 41 units @ $37 + 31 units @ $30 + 4 units @ $29
= $2,563
Closing stock = 18 units @ $29 = $522
As per FIFO cost = 22 units @ $29 + 31 units @ $30 + 23 units @ $37 = $2,419
Closing stock = 18 units @ $37 = $666
Thus, difference of closing stock = $666 - $522 = $144
Profit as per FIFO is higher by $144
Cost is higher in LIFO by $2,563 - $2,419 = $144
Thus, difference in gross profit = $144 + $144 = $288
