Question

2. The Precision Door Company sold 2,200 doors during 2018 at $160 per door. Its beginning inventory on January 1 was 130 doors at $56. Purchases made during the year were as follows:

February 225 doors at $62

April 350 doors at $65

June 700 doors at $70

August 300 doors at $66

October 400 doors at $68

November 250 doors at $72

Compute the COGS and Ending Inventory under each of the following inventory cost flow assumptions: (a) Simple Weighted Average, (b) FIFO, (c) LIFO.

Answer 1

		The Precision Door Company
		Unit	Unit Cost	Total Cost
	Beginning Inventory on Januay 1	130	$            56.00	$                             7,280.00
	February	225	$            62.00	$                          13,950.00
	April	350	$            65.00	$                          22,750.00
	June	700	$            70.00	$                          49,000.00
	August	300	$            66.00	$                          19,800.00
	October	400	$            68.00	$                          27,200.00
	November	250	$            72.00	$                          18,000.00
	Total	2355		$                       1,57,980.00
	Closing Inventory(2355-2200)	155
	Unit Price=	Total cost/Total Units
	Unit Price=	($157980/2355)
	Unit Price=	$                                        67.08
a)	Simple Weighted Average Inventory
	Ending Inventory(Units)=(A)	155
	Price per unit=(B)	$                                        67.08
	Ending Inventory Price=(A)*(B)	$                                10,397.83
	Cost of goods available for sales	$                            1,57,980.00
	Less: Ending Inventory	$                                10,397.83
	Cost of goods sold(2355*$67.08)	$                            1,47,582.17
	Simple Weighted average: Weight are taken for all purchases including beginning inventory to caluclated unit price.
	FIFO Ending Inventory
b)		Units	Rate	Total cost
	November	155	$            72.00	$                          11,160.00
	Total	155		$                          11,160.00
	FIFO -Cost of goods sold
	Cost of goods available for sales	$                            1,57,980.00
	Less: Ending Inventory	$                              -11,160.00
	Cost of goods sold	$                            1,46,820.00
	FIFO Method: First in first out,it means units which are purchased first are sold first.
	LIFO Ending Inventory
c)		Units	Rate	Total cost
	Beginning Inventory	130	$            56.00	$                             7,280.00
	February	25	$            62.00	$                             1,550.00
	Total	155		$                             8,830.00
	LIFO-Cost of goods sold
	Cost of goods available for sales	$                            1,57,980.00
	Less: Ending Inventory	$                                 -8,830.00
	Cost of goods sold	$                            1,49,150.00
	LIFO Method: Last in first out ,it means inventory which are purchased last,sold first.
		Simple weighted Average	FIFO	LIFO
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