In its first month of operation, Marquette Company purchased 100 units of inventory for $9, then 200 units for $8, and finally 150 units for $8. At the end of the month, 200 units remained. Compute the amount of phantom profit that would result if the company used FIFO rather than LIFO.
The company uses the periodic inventory system.
Phantom Profit $
2007-03-03 02:23:58 · 1 answers · asked by ericarae1 2 in Education & Reference ➔ Homework Help
Answers are not 0 or $1700
2007-03-03 06:14:55 · update #1
A reduction in inventory is phantom profit.
If the company used First-in, First-out, the 200 remaining items would cost $1600. This would be a reduction in inventory over the first 200 purchased, which cost 100*9 +100*8 or $1700.
If LIFO is used, the 200 units remaining would be worth $1700, so no phantom profit.
2007-03-03 03:02:12 · answer #1 · answered by Steve A 7 · 0⤊ 0⤋