Periodic Inventory System: It is a system in which the inventory is updated in the accounting records on a periodic basis such as at the end of each month, quarter or year. In other words, it is an accounting method which is used to determine the amount of inventory at the end of each accounting period. In First-in-First-Out method, the cost of initial purchased items are sold first. The value of the ending inventory consists the recent purchased items. In Last-in-First-Out method, the cost of last purchased items are sold first. The value of the closing stock consists the initial purchased items. To Compute: The amount of Company P’s profit (if company used FIFO rather than LIFO).

Question

In its first month of operation, Vaughn Manufacturing purchased 320 units of inventory for $8, then 420 units for $9, and finally 360 units for $10. At the end of the month, 400 units remained.Compute the amount of phantom profit that would result if the company used FIFO rather than LIFO. Phantom profit $enter a phantom profit in dollars

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Chapter 6, Problem 6.7BE

To determine

Periodic Inventory System: It is a system in which the inventory is updated in the accounting records on a periodic basis such as at the end of each month, quarter or year. In other words, it is an accounting method which is used to determine the amount of inventory at the end of each accounting period.

In First-in-First-Out method, the cost of initial purchased items are sold first. The value of the ending inventory consists the recent purchased items.

In Last-in-First-Out method, the cost of last purchased items are sold first. The value of the closing stock consists the initial purchased items.

To Compute: The amount of Company P’s profit (if company used FIFO rather than LIFO).

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In its first month of operation, Vaughn Manufacturing purchased 320 units of inventory for $8, then 420 units for $9, and finally 360 units for $10. At the end of the month, 400 units remained.Compute the amount of phantom profit that would result if the company used FIFO rather than LIFO. Phantom profit $enter a phantom profit in dollars

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