Question

Inventory by Three Methods

The units of an item available for sale during the year were as follows:

Jan.1	Inventory	27 units at $400
Feb. 19	Purchase	54 units at $460
June 8	Purchase	63 units at $520
Oct. 7	Purchase	56 units at $550

There are 45 units of the item in the physical inventory at December 31.

Determine the cost of ending inventory using (a) the first-in, first-out method, (b) the last-in, first-out method, and (c) the average cost method.

	Inventory Cost
a. First-in, first-out method	$____________
b. Last-in, first-out method	$____________
c. Average cost method	$____________

Answer 1

		Units	Price	Total
1-Jan	Inventory	27	$400	$10,800
19-Feb	Purchase	54	$460	$24,840
8-Jun	Purchase	63	$520	$32,760
7-Oct	Purchase	56	$550	$30,800
		200		99200
Closing Inventory	45 Units
FIFO	So 45 units will be ramining from last purhcase of 7 Oct
Clsoing stock	45*550
Total	24,750
LIFO	So 45 units will be ramining from opening (27) and first purhcase (18) of 19 Feb
Clsoing stock	27*400	10,800
	18*460	8,280
Total		19,080
Average cost	So 45 units will be ramining from closing but will be calculated based on average cost
total inventory cost	99,200
Total units	200
Average cost	496
Closing inventory=	45*496
Closing inventory=	22,320