Question

Bg Sammies Sales, Inc. had the acquisition schedule below in December. During the month of december the company sold 3000 units.  

Units Purchased Units cost $

dec. 3- 900 units	$50
dec. 8 1200 units	$56
dec.19 1500 units	$60
dec. 23 1000 units	$62

REQUIRED: Assuming Big Sammies Sales, Inc. uses a periodic inventory system, calculate the amount of ending inventory under each of the following pricing methods: first-in, first-out; last-in, first-out; and weighted average. (Hint: calculate the Ending Inventory)

Answer 1

in the case of First in first out pricing method ending inventory will be:

Total purchase= 900+1200+1500+1000= 4600 unit

sale during december= 3000 unit

closing inventory= 1600 unit

and value will be calculated as follows:

Dec 23 Purchease -1000 unit *$62= $62000

Dec 19 purchase- 600 unit*$60= $36000

Total amount= $98000

In case Last in first out pricing method:

Dec 3 purchase- 900*50= $45000

Dec 8 purchase= 700*56= $39200

Total value= $84200

Under weighted Average cost method:

Total cost of inventory purchased during the month = (900*50)+(1200*56)+(1500*60)+(1000*62)=$264200

Total unit purchased during the month= 4600 unit

Weighted Avg cost= $57.43 i.e. $264200/4600

Value of closing inventory= 1600 unit*57.43= $91888