In: Finance
Question (2)
Units |
Unit Cost ($) |
Total |
|
Jan. 1 (Beg.) |
100 |
15 |
1,500 |
Jan. 15 Purchase |
100 |
20 |
2,000 |
Jan. 20 Purchase |
200 |
25 |
5,000 |
Jan. 25 Purchase |
150 |
30 |
4,500 |
Total |
550 |
13,000 |
|
Jan. 30 Sold |
220 |
||
Selling Price ($) |
50 |
Required:
Units |
Unit Cost ($) |
Total |
|
Jan. 1 (Beg.) |
100 |
15 |
1,500 |
Jan. 15 Purchase |
100 |
20 |
2,000 |
Jan. 20 Purchase |
200 |
25 |
5,000 |
Jan. 25 Purchase |
150 |
30 |
4,500 |
Total |
550 |
13,000 |
|
Jan. 30 Sold |
220 |
||
Selling Price ($) |
50 |
Required:
A. Assume ABC uses the Weighted – Average method calculate I-ending inventory, II-cost of goods sold and III-gross profit.
Total Units of goods available for sale
Jan. 1 (Beg.) |
100 |
15 |
1,500 |
Jan. 15 Purchase |
100 |
20 |
2,000 |
Jan. 20 Purchase |
200 |
25 |
5,000 |
Jan. 25 Purchase |
150 |
30 |
4,500 |
Total |
550 |
13,000 |
Weighted average cost of goods per units = 13000 / 550 = 23.636 per units
I . ending inventory, = Ending inventory units * Weighted average cost of goods per units
Ending inventory units = Total units available for sales - Sold units
Total units available for sales = 550 units
Sold units = 220
Ending inventory units = 550 - 220 = 330
ending inventory, = 330 * 23.636 = 78000
II-cost of goods sold = Total units sold * Weighted average cost of goods per units
Total units sold = 220 units
Weighted average cost of goods per units = 23.64 per units
-cost of goods sold = 220 * 23.636 = 5200
III-gross profit. = Sales - Cost of goods sold
Sales = sold units * selling price
sold units = 220 units
Selling price = 50 per units
Sale = 220 * 50 = 11000
Cost of goods sold = 5200
Gross profit = 11000 - 5200 = 5800
B. Assume ABC uses LIFO method calculate I-ending inventory, II-cost of goods sold and III-gross profit.
Total Units of goods available for sale
Jan. 1 (Beg.) |
100 |
15 |
1,500 |
Jan. 15 Purchase |
100 |
20 |
2,000 |
Jan. 20 Purchase |
200 |
25 |
5,000 |
Jan. 25 Purchase |
150 |
30 |
4,500 |
Total |
550 |
13,000 |
**Assign the cost of the newest goods to cost of goods sold and cost of oldest goods to inventory
Here I first calculate the cost of goods sold, because this way is easy to find remaining inventory
II-cost of goods sold = cost of the newest goods to cost of goods sold
Sold units total = 220
150 units are taken from jan 25th purchase with cost of 30 per units
Remaining ( 220 - 150 = 70 ) 70 units are taken from Jan 20th purchase with cost of 25 per units
Cost of good sold = 6250
Particulars |
units |
Cost per units |
Total cost |
jan 25th purchase |
150 |
30 |
4500 |
Jan 20th purchase |
70 ( 220 - 150 ) |
25 |
1750 |
Total cost of good sold |
6250 |
I-ending inventory = Cost of oldest goods to ending inventory
Total ending inventory units = 330
Cost of ending inventory = 6750
Particulars |
units |
Cost per units |
Total |
jan 20th purchase |
130 (200-70) |
25 |
3250 |
jan 15th purchase |
100 |
20 |
2000 |
Jan 1 beg. |
100 |
15 |
1500 |
Total |
6750 |
II-gross profit. = sales - cost of goods sold
Sales = 220 * 50 = 11000
cost of goods sold = 6250
gross profit. = 11000 - 6250 = 4750