Problem 3. Inventory Cost Flow Assumption: FIFO, LIFO, Average Cost; Periodic & Perpetual Methods (2.1 content area)

Inventory information for UMPI Corporation discloses the following information for the month of June.

June 1 : Balance 450 units @ $11

June 11 : Purchased 950 units @ $13

June 20 : Purchased 525 units @ $14

June 15 : Sold 200 units @ $24

June 15 : Sold 575 units @ $25

June 27 : Sold 324 units @ $27

Instructions

3.8 Explain why LIFO usually produces a lower gross profit than FIFO.