Question

The following data applies to a particular item of merchandise:

On hand at start of period                   300      $5.10

1st purchase                                        500      5.20

2nd purchase                                       700      5.30

3rd purchase                                        600      5.50

Number of units available for sale      2,100

On hand at end of period                    500

Number of units sold during period 1,600

Of the 1,600 units sold during the period, 300 were from the beginning inventory; 500 from the first purchase; 600 from the second purchase; And 200 from the last purchase. The amount of the cost of goods sold would be

FIFO

LIFO

Weighted Avg

Answer 1

Solution

		Cost of goods sold
FIFO		$                   8,390
LIFO		$                   8,570
Weighted average		$                   8,490 or 8488

Working

	Units	Cost per unit	value
Beginning Balance	300	$                     5.10	$ 1,530
Purchases
	500	$                     5.20	$ 2,600
	700	$                     5.30	$ 3,710
	600	$                     5.50	$ 3,300
Total	2100		$ 11,140

.

Average Cost of Inventory
Units	(A)	2100
Total Cost	(B)	$ 11,140
Average Cost	(C=B/A)	$                     5.30

.

FIFO
Total Units Avalable for sale		2100
Units Sold		1600
Closing Stock in Units		500
Valuation
Ending Inventory	500	@	$               5.50	$ 2,750
Value Of Ending Inventory				$              2,750
Cost of Goods sold				$              8,390
LIFO
Total Units Avalable for sale		2100
Units Sold		1600
Closing Stock in Units		500
Valuation
Ending Inventory	300	@	$               5.10	$ 1,530
	200	@	$               5.20	$ 1,040
Value Of Ending Inventory				$              2,570
Cost of Goods sold				$              8,570
Weighted Average method
Total Units Avalable for sale		2100
Units Sold		1600
Closing Stock in Units		500
Valuation
Ending Inventory	500	@	$               5.30	$              2,652
Value Of Ending Inventory				$              2,652
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)			$              8,488