Question

I'm having hard time undestanding FIFO and LIFO. I don't exactly follow where these new units are coming from. And where did 102 units from Jan 13 came from this question? Thanks for the help

https://www.chegg.com/homework-help/questions-and-answers/fit-gym-began-january-merchandise-inventory-78-crates-vitamins-cost-total-4-290-month-fit--q26964071#:~:text=Transcribed%20Image%20Text-,Fit%20Gym%20began%20January%20with%20merchandise%20inventory%20of%2078%20crates,crates%20%40%20%24%20116%20each%20Jan.

Answer 1

FIFO is first in first out

units purchased first is cleared first when sales happens

so ending inventory = 78 +156 - 180 +114 -150 = 18 crates at $ 75 = $1350

Cost of goods sold =

first 180 units were sold and then 150

= for 180 units sold; 78 units will be from beginning inventory and 102 units @ 64 = 4290 + [ 102*64] = $10818

= for 150 units sold; 54 units will be @64 as 54 units were still left from 156 units of purchase and 96 units @ 75 = [54*64] + [ 96*75] = $10656

cogs = 10656 + 10818 = 21474

Gross profit = sales - cogs = [(180*100)+(150*116)] - 21474 = 13926

LIFO is last in first out

units purchased last is cleared first when sales happens

so ending inventory = 78 +156 - 180 +114 -150 = 18 crates at $ (4290/78), at beginning inventory rate = $990

Cost of goods sold =

first 180 units were sold and then 150

= for 180 units sold; 156 units at $64 and left 24 units @ 55 = [156*64] + [24*55] = $11304

= for 150 units sold; 114  units will be @75 and rest 36 units @ 55 = [114*75] + [ 36*55] = $10530

cogs = 10530+11304 = 21834

Gross profit = sales - cogs = [(180*100)+(150*116)] - 21834 = 13566