Question

Part one: Calculate cost per unit. (Round answer to 2 decimal places) Weighted-average cost per unit

Part two: Calculate ending inventory, cost of goods sole, and gross profit under each of the following methods: LIFO, FIFO, and Average Cost.

Part three: Calculate gross profit rate under each of the following methods: LIFO, FIFO, and Average-cost (Round answers to 1 decimal place)

You are provided with the following information for Cheyenne Inc. for the month ended June 30, 2019. Cheyenne uses the periodic method for inventory.

Date				Description		Quantity		Unit Cost or Selling Price
June		1		Beginning inventory		39		$ 39
June		4		Purchase		137		43
June		10		Sale		112		72
June		11		Sale return		16		72
June		18		Purchase		58		45
June		18		Purchase return		8		45
June		25		Sale		63		77
June		28		Purchase		31		49

Answer 1

Part One :

Calculation of Weighted average cost per unit :

   = Cost of goods available for sale / Total units available for sale

= $11,181 / 257

= $ 43.50584 (44 Rounded off)

Working Note :
Date	Explanation	Units	Unit costs	Total costs
1-Jun	Beginning Inventory	39	$39	$1,521
4-Jun	Purchases	137	$43	$5,891
18-Jun	Purchases	58	$45	$2,610
18-Jun	purchase returns	8	$45	$360
28-Jun	Purchases	31	$49	$1,519
	Total	257		$11,181
	Cost of goods available for sale	$11,181
	Total units available for sale	257

Part Two :

Calculation of Ending inventory :

  = Total purchases units – Total Sales units

  = 257 – 159

   = 98 Units.

Under FIFO, the units remaining in inventory are the ones purchased most recently.

28 June         31 units @ $ 49 = $1,519

18 June         50 units @ $45 = $2,250

4 June 17 units @ $ 43 = $731

Total 98 Units $4,500

Under LIFO,

1 June         39 units @ $ 39 = $1,521

4 June         59 units @ $ 43 = $2,537

Total 98 Units $4,058

Calculation of Cost of goods sold under weighted average cost :

Sales 159 units

@ $44 at cost each unit

Cost of goods sold = 159 X $44 = $6,996

3)

Calculation of Gross Profit:

= Sales – Cost of goods sold

= $14,067 - $6,996 = $7,071

Gross Profit Rate = Gross proit / sales

                               = $7,071 / $14,067

                               =50%