Question

FIFO and LIFO Costs Under Perpetual Inventory System

The following units of a particular item were available for sale during the year:

Beginning inventory	20 units @ $45
Sale	15 units @ $72
First purchase	18 units @ $47
Sale	13 units @ $74
Second purchase	28 units @ $48
Sale	25 units @ $74

The firm uses the perpetual inventory system, and there are 13 units of the item on hand at the end of the year.

a. What is the total cost of the ending inventory according to FIFO?
$

b. What is the total cost of the ending inventory according to LIFO?
$

Answer 1

a. Total cost of ending inventory (FIFO): $624

FIFO
	Purchases			Cost of Goods Sold			Ending Inventory
	No. of Units	Unit Cost $	Total Cost $	No. of Units	Unit Price $	Total Issued $	No. of Units	Unit Cost $	Total Cost $
Beg. Bal.							20	45	900
Sale				15	45	675	5	45	225
First purchase	18	47	846				5	45	225
							18	47	846
Sale				5	45	225
				8	47	376	10	47	470
Second purchase	28	48	1344				10	47	470
							28	48	1344
Sale				10	47	470
				15	48	720	13	48	624
Total	46		2190	53		2466	13		624

b. Total cost of ending inventory (LIFO): $604

LIFO
	Purchases			Cost of Goods Sold			Ending Inventory
	No. of Units	Unit Cost $	Total Cost $	No. of Units	Unit Price $	Total Issued $	No. of Units	Unit Cost $	Total Cost $
Beg. Bal.							20	45	900
Sale				15	45	675	5	45	225
First purchase	18	47	846				5	45	225
							18	47	846
Sale				13	47	611	5	45	225
							5	47	235
Second purchase	28	48	1344				5	45	225
							5	47	235
							28	48	1344
Sale				25	48	1200	5	45	225
							5	47	235
							3	48	144
Total	46		2190	53		2486	13		604