Question

please help with this accounting problem!

Send to Gradebook Question 11 View Policies Current Attempt in Progress In its first month of operation, Waterway Industries purchased 340 units of inventory for $9, then 440 units for $10, and finally 380 units for $11. At the end of the month, 420 units remained. Compute the amount of phantom profit that would result if the company used FIFO rather than LIFO. Phantom profit $ e Textbook and Media Attempts: 0 of 3 used Save for Later Submit Answer < Prev Next > Send to Gradebook • Previous

Answer 1

Answer:-

Total Unit Consumed =	Total Purchase - Closing Stock (1160-420)		740
Cost As per FIFO Method (in $)
Unit Purchase	Cost	Amount	Unit Consumed	Amount Consumed
340	9	3060	340	3060
440	10	4400	400	4000
380	11	4180	0	0
1160		11640	740	7060
Cost As per LIFO Method (in $)
Unit Purchase	Cost	Amount	Unit Consumed	Amount Consumed
340	9	3060	0	0
440	10	4400	360	3600
380	11	4180	380	4180
1160		11640	740	7780
Phantom Profit due to use of FIFO Method =	Amount counsumed in LIFO Method- Amount Consumed in FIFO Method		=	720
	i.e 7780- 7060