Brief Exercise 6-5 In its first month of operation, Vaughn Manufacturing purchas

Question

Brief Exercise 6-5

In its first month of operation, Vaughn Manufacturing purchased 190 units of inventory for $6, then 290 units for $7, and finally 230 units for $8. At the end of the month, 270 units remained.

Compute the amount of phantom profit that would result if the company used FIFO rather than LIFO.

Phantom profit

Brief Exercise 6-5 Your answer is incorrect. Try again. In its first month of operation, Vaughn Manufacturing purchased 190 units of inventory for $6, then 290 units for $7, and finally 230 units for $8. At the end of the month, 270 units remained Compute the amount of phantom profit that would result if the company used FIFO rather than LIFO. Phantom profit 140 Click if you would like to Show Work for this question Open Show Work LINK TO TEXT INTERACTIVE TUTORIAL

Explanation / Answer

LIFO cost of good sold=(230*8)+(210*7)= 3310 FIFO cost of good sold=(190*6)+(250*7)= 2890 Phantom profit = 3310-2890 = $420

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