Question

1. During April, Wiggins Company sold 900 units of Product X for $10 per unit.  Its beginning inventory, purchases, and sales during the month were as follows:

April   1          Beginning Inventory   200 units @ $1

            5          Purchases                    200 units @ $2

            8          Sales                            300 units

            10        Purchases                    200 units @ $3

            15        Purchases                    200 units @ $4

            18        Sales                            300 units

            20        Purchases                    200 units @ $5

            25        Purchases                    200 units @ $6

            28        Sales                            300 units

Compute the proper cost to be assigned to ending inventory, cost of goods sold, and gross profit under each of these methods using the periodic system:

(a) Average cost, (b) FIFO, and (c) LIFO.

Must show calculations

Answer 1

(a)	Average Cost
	Total Units Available	1,200	=200+200+200+200+200+200
	Total Cost of goods available for sale	4,200	=200*1+200*2+200*3+200*4+200*5+200*6
	Average cost per unit	3.50	(4,200 / 1,200 )
	Ending Inventory	$ 1,050	=(1200-900)*3.5
	Cost of goods sold	$ 3,150	=900*3.5
	Gross profit	$ 5,850	=(900*10)-3150
(b)	FIFO
	Ending Inventory in units	300	=1200-900
	Ending Inventory	$ 1,700	=200*6+100*5
	Cost of goods sold	$ 2,500	=200*1+200*2+200*3+200*4+100*5
	Gross profit	$ 6,500	=(900*10)-2500
(c.)	LIFO
	Ending Inventory in units	300	=1200-900
	Ending Inventory	$ 400	=200*1+100*2
	Cost of goods sold	$ 3,800	=200*6+200*5+200*4+200*3+100*2
	Gross profit	$ 5,200	=(900*10)-3800