In: Accounting
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.) |
$ | $ |
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 | ||||||