Question

Oahu Kiki tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each month, as if it uses a periodic inventory system. Assume Oahu Kiki’s records show the following for the month of January. Sales totaled 310 units.

	Date	Units			Unit Cost			Total Cost
Beginning Inventory	January 1		240		$	80		$	19,200
Purchase	January 15		360			90			32,400
Purchase	January 24		200			110			22,000

Required:

1.	Calculate the number and cost of goods available for sale.

2.	Calculate the number of units in ending inventory.

3.	Calculate the cost of ending inventory and cost of goods sold using the (a) FIFO, (b) LIFO, and (c) weighted average cost methods.

Answer 1

Ans.1	Number of units available for sale			800
	Cost of goods available for sale			73600
	*Calculation:
	Date	Particulars	Units	Rate	Cost
	1-Jan	Beginning inventory	240	80	19200
	15-Jan	Purchase	360	90	32400
	24-Jan	Purchase	200	110	22000
		Total	800		73600
Ans.2	Number of units in ending inventory		490
	*Calculation:
	Total units available for sale - Units sold
		800 - 310
		490
Ans.3		FIFO	LIFO	Weighted Average
	Cost of goods sold	25500	31900	28520
	Cost of Ending inventory	48100	41700	45080
	*FIFO
	Date	Units	Rate	COGS	Date	Units	Rate	Ending inventory
	1-Jan	240	80	19200	24-Jan	200	110	22000
	15-Jan	70	90	6300	15-Jan	290	90	26100
		310		25500		490		48100
	*LIFO:
	Date	Units	Rate	COGS	Date	Units	Rate	Ending inventory
	24-Jan	200	110	22000	1-Jan	240	80	19200
	15-Jan	110	90	9900	15-Jan	250	90	22500
		310		31900		490		41700
	*Weighted Average:
	Weighted average cost per unit = Cost of goods available for sale / Number of units available for sale
						73600 / 800
						92
	Cost of goods sold = Weighted average unit cost * Units sold
				92 * 310
				28520
	Cost of Ending inventory = Weighted Average cost per unit * Ending inventory units
					92 * 490
					45080