A company had the following purchases during the current year: January: 10 units at $120
February: 20 units at $125
May: 15 units at $130
September: 12 units at $135
November: 10 units at $140
On December 31, there were 26 units remaining in ending inventory. Using the LIFO inventory valuation method, what is the cost of the ending inventory?
a) $3,280.
b) $3,200.
c) $3,445.
d) $3,540.
e) $3,640.

b) $3,200.

Explanation:

LIFO assumes that the units to arrive last will be sold first. This means that valuation of inventory is based on prices of earlier units purchased.

Calculation

Ending Inventory  = 10 x $120 + 16 x $125

                              = $3,200

Therefore,

Using the LIFO inventory valuation method, the cost of the ending inventory is  $3,200.

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