Question

The following units are available for sale during the year:

January 1 Beginning Inventory 10 units at $18 each

April 3 Purchase 30 units at $20 each

August 31 Purchase 28 units at $25 each

September 29 Purchase 17 units at $30 each

December 31 Ending Inventory 21 units

Determine ending inventory cost by (a) FIFO method, (b) LIFO method, and (c) average cost method.

Answer 1

A) calculation of ending inventory under FIFO METHOD :

   ending inventory of 21 units under FIFO METHOD

ending inventory = 17 units @30 each + 4 units @ 25 each

                              = 510 + 100

                              = $ 610

B) calculation of ending inventory under LIFO METHOD :

   ending inventory of 21 units LIFO METHOD

ending inventory = 10 units @ 18 + 11 units @ 20

                               = 180 + 220

                               = $ 400

C) calculation of ending inventory under AVERAGE COST METHOD :

average cost

DATE	UNITS	UNIT COST	TOTAL COST
1 JAN	10	18	180
3 APR	30	20	600
31 AUG	28	25	700
29 SEP	17	30	510
TOTAL	85		1990

AVERAGE COST = TOTAL COST / TOTAL UNITS

                           = 1990 / 85

                            = 23.41

ENDING INVENTORY = 21 UNITS @23.42

                                     =$ 492