Question

Inventory Costing Methods—Periodic System

Oxendine Company's inventory records for the month of November reveal the following:

Inventory, November 1	200 units @ $18.00
November 4, purchase	250 units @ $18.50
November 7, sale	300 units @ $42.00
November 13, purchase	220 units @ $18.90
November 18, purchase	150 units @ $19.00
November 22, sale	380 units @ $42.50
November 24, purchase	200 units @ $19.20
November 28, sale	110 units @ $43.00

Selling and administrative expenses for the month were $10,800. Depreciation expense was $4,000. Oxendine's tax rate is 35%.

Required:

1. Calculate the cost of goods sold and ending inventory under each of the following three methods assuming a periodic inventory system: (a) FIFO, (b) LIFO, and (c) weighted average. In your calculations, round weighted average unit cost to three decimal places and round all other calculations and your final answers to the nearest dollar.

Inventory Costing Method	Ending Inventory	Cost of Goods Sold
FIFO	$	$
LIFO	$	$
Weighted average	$	$

2. Calculate the gross profit and net income under each costing assumption. When required, round your answers to the nearest dollar.

	Gross Profit	Net Income
FIFO	$	$
LIFO	$	$
Weighted Average	$	$

Answer 1

Cost of Goods available for sale = 200 * $18.00 + 250 * $18.50 + 220 * $18.90 + 150 * $19.00 + 200 * $19.20
Cost of Goods available for sale = $19,073

Number of units available for sale = 200 + 250 + 220 + 150 + 200
Number of units available for sale = 1,020

Number of units sold = 300 + 380 + 110
Number of units sold = 790

Answer 1.

FIFO:

Cost of Goods Sold = 200 * $18.00 + 250 * $18.50 + 220 * $18.90 + 120 * $19.00
Cost of Goods Sold = $14,663

Ending Inventory = 30 * $19.00 + 200 * $19.20
Ending Inventory = $4,410

LIFO:

Cost of Goods Sold = 200 * $19.20 + 150 * $19.00 + 220 * $18.90 + 220 * $18.50
Cost of Goods Sold = $14,918

Ending Inventory = 30 * $18.50 + 200 * $18.00
Ending Inventory = $4,155

Weighted Average:

Average Unit Cost = Cost of Goods available for sale / Number of units available for sale
Average Unit Cost = $19,073 / 1,020
Average Unit Cost = $18.699

Cost of Goods Sold = 790 * $18.699
Cost of Goods Sold = $14,772

Ending Inventory = 230 * $18.699
Ending Inventory = $4,301

Answer 2.

Sales Revenue = 300 * $42.00 + 380 * $42.50 + 110 * $43.00
Sales Revenue = $33,480