Answer :
To determine the value of the 100 hats left in inventory using the Last-In, First-Out (LIFO) method, we need to evaluate the cost based on the most recent purchases first. Let's break down the purchases:
1. September: 75 hats at [tex]$13 each 2. August: 100 hats at $[/tex]10 each
3. July: 75 hats at [tex]$14 each 4. June: 50 hats at $[/tex]12 each
Since we are using the LIFO method, we start with the most recent month and subtract the number of hats in reverse chronological order until we account for all 100 hats.
### Step-by-Step Calculation:
1. September:
- Number of hats purchased: 75
- Price per hat: [tex]$13 - Since hats left to account for is 100 and we have 75 hats from September, we subtract 75 hats from September. - Cost: \( 75 \text{ hats} \times \$[/tex]13 \text{ per hat} = \[tex]$975 \) - Hats left to account for: \( 100 - 75 = 25 \) 2. August: - Number of hats purchased: 100 - Price per hat: $[/tex]10
- We still need 25 more hats, so we take these 25 hats from August.
- Cost: [tex]\( 25 \text{ hats} \times \$10 \text{ per hat} = \$250 \)[/tex]
- Hats left to account for: [tex]\( 25 - 25 = 0 \)[/tex]
To calculate the total value of the 100 hats in inventory:
[tex]\[ \text{Total Value} = \$975 + \$250 = \$1225 \][/tex]
Therefore, the correct answer is:
D. \$ 1225
1. September: 75 hats at [tex]$13 each 2. August: 100 hats at $[/tex]10 each
3. July: 75 hats at [tex]$14 each 4. June: 50 hats at $[/tex]12 each
Since we are using the LIFO method, we start with the most recent month and subtract the number of hats in reverse chronological order until we account for all 100 hats.
### Step-by-Step Calculation:
1. September:
- Number of hats purchased: 75
- Price per hat: [tex]$13 - Since hats left to account for is 100 and we have 75 hats from September, we subtract 75 hats from September. - Cost: \( 75 \text{ hats} \times \$[/tex]13 \text{ per hat} = \[tex]$975 \) - Hats left to account for: \( 100 - 75 = 25 \) 2. August: - Number of hats purchased: 100 - Price per hat: $[/tex]10
- We still need 25 more hats, so we take these 25 hats from August.
- Cost: [tex]\( 25 \text{ hats} \times \$10 \text{ per hat} = \$250 \)[/tex]
- Hats left to account for: [tex]\( 25 - 25 = 0 \)[/tex]
To calculate the total value of the 100 hats in inventory:
[tex]\[ \text{Total Value} = \$975 + \$250 = \$1225 \][/tex]
Therefore, the correct answer is:
D. \$ 1225