Memo analysis

Prepare your analysis in a 1-2 page memo to a manager
In July, a company purchased 100 units of inventory for $6 each, then 200 units for $7 each, and finally 150 units for $8 each. At the end of July, 180 units remained in the inventory.

1. Compute the amount of phantom profit if the company used FIFO rather than LIFO.
2. Explain why phantom profit exists.
3. If you are ever a manager of inventory, how do you propose to keep an eye on phantom profit?
   Prepare your analysis in a 1-2 page memo to your manager.
   Phantom profit: https://www.accountingcoach.com/blog/phantom-profit-illusory-proft

Sample Solution