Question

Marigold Company is a multiproduct firm. Presented below is information concerning one of its products, the Hawkeye.

Date		Transaction		Quantity		Price/Cost
1/1		Beginning inventory		1,400		$14
2/4		Purchase		2,400		21
2/20		Sale		2,900		35
4/2		Purchase		3,400		27
11/4		Sale		2,600		38

(a)

Calculate average-cost per unit. (Round answer to 4 decimal places, e.g. 2.7613.)

Average-cost per unit

Find all of these:

a) Periodic System, FIFO cost flow, (b) Perpetual System, FIFO Cost Flow
(c) Periodic System, LIFO Cost Flow (d) Periodic, LIFO cost flow, (e)Periodic, weighted avg cost flow, (f) perpetual system, moving average cost flow.

Answer 1

Solution:

Total sales = 2900 + 2600 = 5500

a.

Average cost per unit = (1400 x14) + (2400 x 21) + (3400 x 27) / (1400 + 2400 + 3400)

= (19600 + 50400 + 91800) / 7200

= 161,800/7200

= 22.47

a. Periodic system, FIFO Cost flow

Cost of goods sold = (1400 x 14) + (2400 x 21) + (5500 - 1400 - 2400) x 27 = 115,900

b.

Perpetual system, FIFO Cost flow

Cost of goods sold = (1400 x 14) + (2400 x 21) + (5500 - 1400 - 2400) x 27 = 115,900

c.

Periodic system, LIFO Cost flow

Cost of goods sold = (3400 x 27) + (5500-3400) x 21 = 135,900

d.

Perpetual system, LIFO Cost flow

Cost of goods sold

= (2400 x 21) + (2900 - 2400) x 14 + (2600 x 27)

= 127,600

e.

Periodic weighted average

Weighted average price = (19600 + 50400 + 91800) / (1400 + 2400 + 3400) = 161800 / 7200 = 22.47

Cost of goods sold = 5500 x 22.47 = 123585

f.

Perpetual system, moving average

Averge price for 2900 units= (19600 + 50400) / (1400 + 2400) = 18

Cost of goods sold for 2900 = 2900 x 18 = 52,200

Average price for 2600 units =(19600 + 50400 - 52200 + 91800) / (1400 + 2400 - 2900 + 3400) = 25

Cost of goods sold for 2600 = 2600 x 25 = 65,000

Cost of goods sold for 5500 = 52200 + 65000 = 117,200