X, Inc., uses the LIFO cost flow assumption. X had 100 items in its Jan. 1 begin
ID: 2462110 • Letter: X
Question
X, Inc., uses the LIFO cost flow assumption. X had 100 items in its Jan. 1 beginning inventory balance, totaling $500 (that is, $5 each). X purchased another 200 items on Jan. 9 for $7 each. On Jan. 12 X sold 230 items for $10 each. By how much did this LIFO liquidation increase X's usual profit on a sale of 230 items? (omit , and $ in the answer)
notice: "liquidation" the answer is not 750
Company X purchased inventory for $2,700. X normally pays additional shipping charges of $300 per order, but in this one instance paid $900 to rush the shipment because inventory levels on hand had fallen unusually low. At what cost should X record the inventory? (omit , and $ in the answer)
notice: the answer is not 3600
Explanation / Answer
Sales LIFO Method units Price cost Units Price cost Opening Inventory 100 5 500 Purchases 200 7 1400 Cost of sale 200 7 1400 Cost of sale 30 5 150 300 6.33 1900 1550 Average cost Sale 2300 Cost of sale 1455.9 (6.33*230) Profit 844.1 LIFO Method Sale price 2300 Cost of sale 1550 Gross profit 750 Change in profit 94.1 Should record the inventory at : inventory 2700 Normal shipping charges 300 inventory cost 3000
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