Question

Exercise 5-3A Allocating product cost between cost of goods sold and ending inventory: multiple purchases LO 5-1

Cortez Company sells chairs that are used at computer stations. Its beginning inventory of chairs was 120 units at $55 per unit. During the year, Cortez made two batch purchases of this chair. The first was a 142-unit purchase at $62 per unit; the second was a 220-unit purchase at $66 per unit. During the period, it sold 286 chairs.

Required
Determine the amount of product costs that would be allocated to cost of goods sold and ending inventory, assuming that Cortez uses

a. FIFO:

b. LIFO:
  

c. Weighted average: (Round your intermediate calculations and final answers to the nearest whole dollar amount.)

a. FIFO:
  

Answer 1

Requirement a
Using FIFO
	Units	Unit price	$	Calculation
Beginning Inventory	120	$55	6,600
First Purchases	142	62	8,804
Second Purchases	220	66	14,520
Total cost of goods available for sale	482		29,924
Cost of goods sold	286		16,988	(120*55)+(142*62)+(24*66)
Ending Inventory	196		12,936	(196*66)
Requirement b
Using LIFO
	Units	Unit price	$	Calculation
Beginning Inventory	120	$55	6,600
First Purchases	142	62	8,804
Second Purchases	220	66	14,520
Total cost of goods available for sale	482		29,924
Cost of goods sold	286		18,612	(220*66)+(66*62)
Ending Inventory	196		11,312	(76*62)+(120*55)
Requirement c
Using Weighted average
	Units	Unit price	$	Calculation
Beginning Inventory	120	$55	6,600
First Purchases	142	62	8,804
Second Purchases	220	66	14,520
Total cost of goods available for sale	482	62	29,924	(29,924/482)
Cost of goods sold	286		17,732	(286*62)
Ending Inventory	196		12,192	(29,924-17,732