Question

Jefferson Company's record of transactions concerning part x for the month of April was as follows

Purchases							Sales
April     1			390	@	$7.00		April     5		590
4			690	@	7.1		12		490
11			590	@	7.4		27		1,380
18			490	@	7.5		28		150
26			890	@	7.8
30			490	@	8.1

a, Calculate average- cost per unit. Assume that perpetual inventory records are kept in units only

average cost per unit -

b, compute the inventory at April 30 on each of the following bases. Assume that perpetual inventory records are kept in units only. (1) first in, first out (FIFO), (2) Last-in, first out (LIFO), (3) average cost

Ending Inventory - 1(FIFO) _______(2) (LIFO)_________ - 3 (Average- cost)________

if the perpetual inventory record is kept in dollars and costs are computed at the time of each withdrawal, what amount would be shown as ending Inventory under (1) FIFO, (2) LFIO, And (3) Average-Cost?

Ending Inventory - 1(FIFO)_______ - (2) (LIFO)_________ - 3 (Average- cost)_______

Answer 1

a) Average cost per unit [($7 + $7.1 + $7.4 + $7.5 + $7.8 + $8.1)/6]	$7.48
b)
Units at April 1	390
Add: Purchases:
April 4	690
April 11	590
April 18	490
April 26	890
April 30	490
Total units available for sale	3,540
Less: Units sold:
April 5	-590
April 12	-490
April 27	-1,380
April 28	-150
Units in Ending Inventory on April 30	930
FIFO:	Units (a)	Rate (b)	Cost (a*b)
From April 30	490	$8.10	$3,969
From April 26 (930 - 490)	440	$7.80	$3,432
Cost of Ending Inventory on April 30 under FIFO	930		$7,401
LIFO:	Units (a)	Rate (b)	Cost (a*b)
From April 4	690	$7	$4,830
From April 11 (930 - 690)	240	$7.10	$1,704
Cost of Ending Inventory on April 30 under LIFO	930		$6,534
Average Cost	Units (a)	Rate (b)	Cost (a*b)
Cost of Ending Inventory on April 30 under Average Cost	930	$7.48	$6,956

Therefore -

Ending Inventory - 1(FIFO) $7,401 - (2) (LIFO) $6,534 - 3 (Average- cost) $6,956