Question

Blossom Company began the year with 9 units of marine floats at a cost of $10 each. During the year, it made the following purchases: May 5, 24 unit at $16; July 16, 19 units at $20; and December 7, 24 units at $23. Assume there are 28 units on hand at the end of the period. Blossom uses the periodic approach.

Determine the cost of goods sold under FIFO.

Determine the cost of goods sold under LIFO.

Calculate average unit cost. (Round answer to 2 decimal places, e.g. 5.12.)

Answer 1

Calculation of cost of goods available for sale

Date	Units	Unit cost	Total cost
Jan. 1	9	$10	$90
May 5	24	$16	$384
July 16	19	$20	$380
Dec. 7	24	$23	$552
Total	76		$1,406

cost of goods available for sale = $1,406

Number of units available for sale = 76 units

Ending inventory units = 28 units

Number of units sold = Number of units available for sale - Ending inventory units

= 76 - 28

= 48

Calculation of cost of goods sold under FIFO

Date	Units	Unit cost	Total cost
Jan. 1	9	$10	$90
May 5	24	$16	$384
July 16	15	$20	$300
Total	48		$774

cost of goods sold under FIFO = $774

Calculation of cost of goods sold under LIFO

Date	Units	Unit cost	Total cost
May 5	5	$16	$80
July 16	19	$20	$380
Dec. 7	24	$23	$552
Total	48		$1,012

cost of goods sold under LIFO = $1,012

Average unit cost = cost of goods available for sale/Number of units available for sale

= 1,406/76

= $18.5