38 Bat Company began the year with 4000 units of inventory p

38. Bat Company began the year with 4,000 units of inventory purchased for $4.00 per unit. On March 1, Bat Company purchased another 10,000 units for $5.00 per unit. Bat purchased another 6,000 units for 6 S5.50 per unit on September 15. During the year Bat Company sold 15,000 units. Assuming Bat Company uses the LIFO inventory flow assumption, what was Bat Company\'s ending inventory? a. $16,000 b. $27,500 c. $71,500 *d. $21,000

Solution

Under the LIFO assumption, goods purchased at a later date are sold first. Total units available for sale = 4000+10000+6000 = 20000 Ending inventory units = 20000-15000 = 5000 Units sold comprise of 6000 units from Sep 15 purchase and 9000 units from March 1 purchase Cost of ending inventory = (4000*4)+(1000*5) = $21000 Option D is correct