Question

You have the following information for Metlock, Inc. for the month ended October 31, 2022. Metlock uses a periodic method for inventory.

Date		Description		Units		Unit Cost or Selling Price
Oct. 1		Beginning inventory		65		$22
Oct. 9		Purchase		140		24
Oct. 11		Sale		100		40
Oct. 17		Purchase		100		25
Oct. 22		Sale		65		45
Oct. 25		Purchase		75		27
Oct. 29		Sale		110		45

A) Calculate the weighted-average cost. (Round answer to 3 decimal places, e.g. 5.125.)

Weighted-average cost per unit

=

B) Calculate ending inventory, cost of goods sold, gross profit under each of the following methods.

(1) LIFO.
(2) FIFO.
(3) Average-cost. (Round answers to 0 decimal place, e.g. 125.)

		LIFO		FIFO		AVERAGE-COST
The ending inventory		$		$		$
The cost of goods sold		$		$		$
Gross profit		$		$		$

C) Calculate gross profit rate under each of the following methods

(1) LIFO.
(2) FIFO.
(3) Average Cost. (Round answers to 1 decimal place, e.g. 51.2%)  

		LIFO		FIFO		AVERAGE-COST.
Gross Profit rate		%		%		%

Answer 1

Ans. A	Available for sale :
	Date	Units	Rate	Total
	1-Oct	65	$22.00	$1,430
	9-Oct	140	$24.00	$3,360
	17-Oct	100	$25.00	$2,500
	25-Oct	75	$27.00	$2,025
	Cost of goods available for sale	380		$9,315
	Average cost per unit =   Total cost of goods available for sale / Total units available
	$9,315 / 380
	$24.513	per unit
Ans. B		LIFO	FIFO	Weighted average
	The ending inventory	$2,390	$2,775	$2,574
	The cost of goods sold	$6,925	$6,540	$6,741
	Gross profit	$4,950	$5,335	$5,134
	*WORKING    NOTES:
	Units sold   (100 + 65 + 110) = 275 units
	Ending inventory units = Units available for sale - Total units sold
	380 - 275
	105 units
	Calculations for Ending inventory, cost of goods sold & gross profit.
1	Periodic LIFO:
	Date	Units	Rate	Total
	1-Oct	65	$22.00	$1,430
	9-Oct	40	$24.00	$960
	Ending inventory	105		$2,390
	Cost of goods sold = Total cost of goods available for sale - Ending inventory
	$9,315 - $2,390
	$6,925
	*In LIFO method the units that have purchased last, are released the first one and the ending inventory
	units remain from the first purchases.
2	Periodic FIFO:
	Date	Units	Rate	Total
	25-Oct	75	$27.00	$2,025
	17-Oct	30	$25.00	$750
	Ending inventory	105		$2,775
	Cost of goods sold = Total cost of goods available for sale - Ending inventory
	$9,315 - $2,775
	$6,540
	*In FIFO method the units that have purchased first (earliest), are released the first one and the ending inventory
	units remain from the last (recent) purchases.
3	Weighted average cost:
	Ending inventory =   Average cost per unit * Ending inventory units
	$24.513 * 105
	$2,574
	Cost of goods sold = Total cost of goods available for sale - Ending inventory
	$9,315 - $2,574
	$6,741