Problema Solution
In its first month of operation, Kuhlman Company purchased 340 units of inventory for $11, then 440 units for $12, and finally 380 units for $13. At the end of the month, 410 units remained.
Compute the amount of phantom profit that would result if the company used FIFO rather than LIFO.
Answer provided by our tutors
we assume that the term "FIFO" in this context means that "first units purchased will be the first units sold"
hence, all 380 for $13 remain along with (410-380=30) for $12 remain
Of course, "phantom profit" must be referring to the units that sold, so that 440 units sell for $11 and (440-30=410) units sold for $12:
440*11 + 410*12
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9760
$9,760 is "phantom profit", assuming this problem statement has been correctly interpreted