Question
At the beginning of 2018, Morley & Company had 540 units in inventory that were purchased at the following prices. Year purchased Units Cost per
At the beginning of 2018, Morley & Company had 540 units in inventory that were purchased at the following prices.
Year purchased Units Cost per unit
2014 120 $100
2015 130 $110
2016 140 $115
2017 150 $120
During 2018 Morley was on strike, but the company sold 400 units of its products out of inventory. The cost that Morley would have incurred to manufacture additional units during 2018 would have been $135 per unit. Assume the company uses the LIFO method for valuing inventories. The impact on 2018 pretax income of the decrease in inventory was:
| a. | $2,600 increase | |
| b. | $7,800 increase | |
| c. | $6,200 increase | |
| d. | $2,600 decrease | |
| e. | $10,400 increase |
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Principles Of Cost Accounting
Authors: Vanderbeck
13th Edition
0324191693, 978-0324191691
