Question

The accounting records of Swifty Corporation show the following data.

Beginning inventory		4,000 units at	$6
Purchases		8,500 units at	$8
Sales		10,700 units at	$11

1) Average unit cost.

2) FIFO

3)LIFO

4) Average cost

Answer 1

1)

Cost Goods Available For Sale
= Beginning inventory Value + purchases Cost
= ( 4000 * 6 ) + ( 8500* 8 )
= 24000 + 68000
= $ 92000

no of units Available For Sale
= Beiginning inventory units + total purchased units – purchase returns
= 4000 + 8500 - 0
= 12500

average unit  Cost = total cost of goods available for Sale / total units Available for sale
= 92000 / 12500
= $ 7.36

2)

under fifo

no of units Sold = 10700
Ending inventory units = no of units Available for Sale - Sold units
= 12500 - 10700
= 1800 units
Cost of ending inventory ( FIFO )
( we need to Calculate From the Latest purchases As it indicate that first purchased goods are sold )
= ( 1800 * 8 )
= $ 14400

LIFO
( we need to Calculate From the First purchases As it indicate that last purchased goods are sold )
= ( 1800 * 6 )
= $ 10800

4)

Average cost method
average unit  Cost = total cost of goods available for Sale / total units Available for sale
= 92000 / 12500
= $ 7.36

Ending inventory = Ending inventory units *  7.36
= 1800 * 7.36

= $ 13248