Question

Date/ Balance or Transaction/ Units/ Unit Cost/ Unit Sales Price

Mar 1/ Inventory/ 3,200/ $64.30/ $86.50
Mar 4/ Purchase/ 3,400/ 64.75/ 87.00
Mar 14/ Sales/ 3,600/ 87.25
Mar 25/ Purchase/ 3,500/ 66.00/ 87.25
Mar 28/ Sales/ 3,450/ 88.00
If Thomas uses a last-in, first-out periodic inventory system, the total cost of the inventory for carburetor 2642J at March 31 is
a) $196,115
b) $197,488
c) $201,300
d) $268,400

Answer 1

The total cost of the inventory for carburetor 2642J at March 31, using the LIFO periodic inventory system, is $19,488.75.

Step-by-step explanation:

The total cost of the inventory for carburetor 2642J at March 31, using the last-in, first-out (LIFO) periodic inventory system, can be calculated by finding the total cost of the remaining units in the inventory. We start with the most recent purchase and work our way back.

Step 1: Calculate the cost of the units remaining from the March 25 purchase:

1. Cost of remaining units = Units remaining * Unit cost = (3,500 - 3,450) * $66.00 = $3,300

Step 2: Calculate the cost of the units remaining from the March 4 purchase:

1. Cost of remaining units = Units remaining * Unit cost = (3,450 - 3,200) * $64.75 = $16,188.75

Step 3: Add the costs from Step 1 and Step 2 to get the total cost of the inventory:

1. Total cost of inventory = Cost of remaining units from March 25 + Cost of remaining units from March 4 = $3,300 + $16,188.75 = $19,488.75

Therefore, the correct answer is $19,488.75 (Option b).