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In: Accounting

In October, Nicole eliminated all existing inventory of cosmetic items. The trouble of ordering and tracking...

In October, Nicole eliminated all existing inventory of cosmetic items. The trouble of ordering and tracking each product line had exceeded the profits earned. In December, a supplier asked her to sell a prepackaged spa kit. Feeling she could manage a single product line, Nicole agreed. Nicole’s Getaway Spa (NGS) would make monthly purchases from the supplier at a cost that included production costs and a transportation charge. NGS would keep track of its new inventory using a perpetual inventory system. On December 31, NGS purchased 10 units at a total cost of $7.20 per unit. Nicole purchased 25 more units at $8.80 in February. In March, Nicole purchased 10 units at $10.80 per unit. In May, 40 units were purchased at $10.60 per unit. In June, NGS sold 40 units at a selling price of $12.80 per unit and 30 units at $10.80 per unit. Compute the Cost of Goods Available for Sale, Cost of Goods Sold, and Cost of Ending Inventory using the first-in, first-out (FIFO) method. (Round "Cost per Unit" to 2 decimal places.

Solutions

Expert Solution

  • Working

FIFO

Cost of Goods available for sale

Cost of Goods Sold

Ending Inventory

Units

Cost/unit

COG for sale

Units sold

Cost/unit

COGS

Units

Cost/unit

Ending inventory

31-Dec

10

$                   7.20

$                              72.00

10

$                 7.20

$                       72.00

0

$                   7.20

$                         -  

Feb

25

$                   8.80

$                            220.00

25

$                 8.80

$                     220.00

0

$                   8.80

$                         -  

Mar

10

$                10.80

$                            108.00

10

$               10.80

$                     108.00

0

$                 10.80

$                         -  

May

40

$                10.60

$                            424.00

25

$               10.60

$                     265.00

15

$                 10.60

$                159.00

TOTAL

85

$                            824.00

70

$                     665.00

15

$                159.00

  • Cost of Goods available for sale = $ 824
  • Cost of Goods Sold = $ 665
  • Cost of ending inventory = $ 159

ekkarill92 answered 2 years ago
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