Question

Oriole Company is a multiproduct firm. Presented below is information concerning one of its products, the Hawkeye.

Date		Transaction		Quantity		Price/Cost
1/1		Beginning inventory		3,000		$18
2/4		Purchase		4,000		27
2/20		Sale		4,500		44
4/2		Purchase		5,000		34
11/4		Sale		4,200		49

Compute cost of goods sold, assuming Oriole uses: (Round average cost per unit to 4 decimal places, e.g. 2.7631 and final answers to 0 decimal places, e.g. 6,548.)

				Cost of goods sold
(a)		Periodic system, FIFO cost flow		$
(b)		Perpetual system, FIFO cost flow		$
(c)		Periodic system, LIFO cost flow		$
(d)		Perpetual system, LIFO cost flow		$
(e)		Periodic system, weighted-average cost flow		$
(f)		Perpetual system, moving-average cost flow		$

Answer 1

Ans.	Available for sale
	Date	Units	Rate	Total
	01-Jan	3000	$18.00	$54,000
	04-Feb	4000	$27.00	$108,000
	02-Apr	5000	$34.00	$170,000
	Cost of goods available for sale	12000		$332,000
	Units sold   (4,500 + 4,200) = 8,700 units
Ans. A	Periodic FIFO:
	Date	Units	Rate	Total
	01-Jan	3000	$18.00	$54,000
	04-Feb	4000	$27.00	$108,000
	02-Apr	1700	$34.00	$57,800
	Cost of goods sold	8700		$219,800
Ans. B	Perpetual FIFO:
	Purchase	Cost of goods sold	Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	01-Jan							3000	$18.00	$54,000
	04-Feb	4000	$27.00	$108,000				3000	$18.00	$54,000
								4000	$27.00	$108,000
	20-Feb				3000	$18.00	$54,000
					1500	$27.00	$40,500	2500	$27.00	$67,500
	02-Apr	5000	$34.00	$170,000				2500	$27.00	$67,500
								5000	$34.00	$170,000
	04-Nov				2500	$27.00	$67,500
					1700	$34.00	$57,800	3300	$34.00	$112,200
	Total				Cost of goods sold		$219,800	Ending inventory	$112,200
	*In FIFO method the units that have purchased first, are released the first one and the ending inventory units remain from last purchases.

Ans. E Periodic Weighted Average: Average cost per unit = Total cost of goods available for sale / Total units available $332,000 / 12,000 $27.6667 per unit Cost of goods sold = No. of units sold * Average cost per unit 8,700 * $27.6667 $240,700 (rounded) Ans. F Perpetual Weighted average: Purchase Quantity Cost of goods sold Rate Rate Total cost Quantity Total cost 4000 $27.00 $ 108,000 Date 01-Jan 04-Feb 20-Feb 02-Apr 04-Nov Quantity 3000 7000 2500 7500

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