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In: Accounting

Inventory Costing Methods Morrison Inc. reported the following information for the month of May: Inventory, May...

Inventory Costing Methods

Morrison Inc. reported the following information for the month of May:

Inventory, May 1 59 units @ $22
Purchase:
May 7 51 units @ $24
May 18 62 units @ $26
May 27 42 units @ $27

During May, Morrison sold 137 units. The company uses a periodic inventory system.

Required:

What is the value of ending inventory and cost of goods sold for May under the following assumptions.

Assumption Cost of Goods Sold Ending Inventory
1. Of the 137 units sold, 50 cost $22, 36 cost $24, 47 cost $26, and 4 cost $27. $ $
2. FIFO $ $
3. LIFO $ $
4. Weighted average method (Round average unit cost to the nearest cent,
and round all other calculations and your final answers to the nearest dollar.)
$ $

Solutions

Expert Solution

Units Unit Cost
May 01           59 $22.00 $1,298
May 07           51 $24.00 $1,224
May 18           62 $26.00 $1,612
May 27           42 $27.00 $1,134
       214 $5,268
Ending Inventory = 77 units
1 Units Unit Cost
            9 $22.00 $198
          15 $24.00 $360
          15 $26.00 $390
          38 $27.00 $1,026
Ending Inventory $1,974
COGS = Beginning inventory + purchases - ending inventory
= $1,298 + $3,970 - $1,974
= $3,294
2 FIFO
Units Unit Cost
          35 $26.00 $910
          42 $27.00 $1,134
Ending Inventory $2,044
COGS = Beginning inventory + purchases - ending inventory
= $1,298 + $3,970 - $2,044
= $3,224
3 LIFO
Units Unit Cost
          59 $22.00 $1,298
          18 $24.00 $432
Ending Inventory $1,730
COGS = Beginning inventory + purchases - ending inventory
= $1,298 + $3,970 - $1,730
= $3,538
4 Weighted average
Units Unit Cost
          59 $22.00 $1,298
          51 $24.00 $1,224
          62 $26.00 $1,612
          42 $27.00 $1,134
       214 $5,268
The weighted average cost per unit $24.62
Ending Inventory = 77 x $24.62 = $1,896
COGS = Beginning inventory + purchases - ending inventory
= $1,298 + $3,970 - $1,896
= $3,372

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