Question

Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Method.

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

Jan. 1	Inventory	14	units at $27	$378
Aug. 13	Purchase	19	units at $30	570
Nov. 30	Purchase	11	units at $32	352
Available for sale		44	units	$1,300

There are 17 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average cost method (round per-unit cost to two decimal places and your final answer to the nearest whole dollar).

a.	First-in, first-out (FIFO)	$
b.	Last-in, first-out (LIFO)	$
c.	Weighted average cost	$

Answer 1

Under the First in first out (FIFO) method of inventory valuation, Cost of goods sold consists of the units from beginning inventory and earliest purchases. Ending inventory consists of the units from recent purchases.

Ending inventory of 17 units consists of 11 units from Nov. 30 purchases and 6 units from Aug. 13 purchases.

Ending inventory = (11*$32) + (6*$30)

= $352 + $180

= $532

Under the Last in first out (LIFO) method of inventory valuation, Cost of goods sold consists of the units from recent purchases. Ending inventory consists of the units from beginning inventory and earliest purchases.

Ending inventory of 17 units consists of 14 units form Beginning inventory and 3 units from Aug. 13 purchases.

Ending inventory = (14*$27) + (3*$30)

= $378 + $90

= $468

Weighted avearge cost per unit = Cost of units available for sale / Number of units available for sale

= $1,300 / 44

= $29.55

Ending inventory = 17 units * $29.55 per unit

= $502

a.	First-in, first-out (FIFO)	$532
b.	Last-in, first-out (LIFO)	$468
c.	Weighted average cost	$502