Answer:
A) Cost of inventory= $1120
B) Cost of inventory= $700
Explanation:
Giving the following information:
Purchases:
(1) 240 units at $5
(2) 340 units at $7
(3) 440 units at $8.
Total units= 1020
There are 140 units on hand at the end of the period.
A) FIFO (first-in, first-out)
Cost of inventory= 140* 8= $1120
B) LIFO (last-in, first-out)
Cost of inventory= 140*5= 700
The cost of ending inventory of Marigold Corp. using FIFO is $1120 and $700 using LIFO.
The first in first out (FIFO) inventory system is an inventory system where it is assumed that the inventory that is first purchases that is the first to be sold.
The last-in, first-out (LIFO) inventory costing method is a method of determining the cost of inventory in which it is assumed that its the inventories that are purchased last are the first to be sold.
The ending inventory of Marigold Corp. is 140 units.
Ending inventory using FIFO method would be taken from the inventory that was purchased last.
Ending inventory = 140 x $8 = $1120.
Ending inventory using LIFO method would be taken from the inventory that was purchased first.
Ending inventory = 140 x$5 = $700
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