From the following? information, calculate the cost of ending inventory and cost of goods sold using...

From the following? information, calculate the cost of ending inventory and cost of goods sold using the? (a) FIFO,? (b) LIFO, and? (c) weighted-average methods.

		Units	Cost
January 1	Beginning Inventory	4	$7
March 6	Purchased	6	2
August 9	Purchased	4	9
December 10	Purchased	5	1

The ending inventory reveals eighteight items unsold

Solutions

Expert Solution

Units in inventory = 8 units

Total Items available for sale = Beginning Inventory + All purc. made = 4 + 6 + 4 + 5 = 19 units

Units sold = 19 units - 8 units = 11 units

Answer (a)

Computation of COGS & cost of ending inventory under FIFO :

Under FIFO, out of 11 units sold , 4 units are from beginning Inventory , 6 units from purchase made on March 6 & 1 unit from purchase made on August 9.

Thus ending inventory consists of 3 units from purchase made on August 9 & 5 units from purchase made on December 10

COGS : (4 * $7) + (6 * $2) +(3* $9) = $28 + $12 + $27 = $67
Cost of ending inventory : (1* $9) + (5 * $1) = $9 + $5 = $14

Answer (b)

Computation of COGS & cost of ending inventory under LIFO :

Under LIFO, out of 11 units sold , 5 units from purchase made on December 10, 4 units from purchase made on August 9 & 2 units from purchase made on March 6.

Thus ending inventory consists of 4 units from purchase made on March 6. & 4 units from beginning Inventory

COGS : (5 * $1) + (4 * $9) +(2* $2) = $5 + $36 +$4 = $45
Cost of ending inventory : (4* $2) + (4 * $7) = $8 +$28 = $36

Answer (c)

Computation of COGS & cost of ending inventory under weighted-average methods :

Average cost per unit = Total cost of inventory / Total units available for sale = $81 / 19 units = $4.26

COGS = 11 units * $4.26316 = $46.86 or $47
Cost of ending inventory = 8 units * $4.26 = $34.08 or $34

ekkarill92 answered 9 months ago

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