Question

The following data concerns inventory and purchases at Muse Company. Inventory, January 1 92 units at $105 Purchases: January 6 62 units at $104 January 15 47 units at $104 January 22 37 units at $98 Inventory, January 31 91 units Determine the cost of the ending inventory on January 31 under the average cost method. Determine the cost of the ending inventory on January 31 under the first in, first out (FIFO) method. Determine the cost of the ending inventory on January 31 under the last in, first out (LIFO) method. Analyze: Which inventory valuation method resulted in the highest dollar amount for ending inventory?

Complete this question by entering your answers in the tabs below.

• Average Cost
• FIFO
• LIFO
• Analyze

Determine the cost of the ending inventory on January 31 under the average cost method. (Round your "average cost per unit" answer to 2 decimal places.)

	Average Cost Merchandise available for sale Ending Inventory Number of units Unit cost Total cost Number of units Average cost per unit Total cost Beginning Inventory, January 1 $0 Purchases: January 6 0 January 15 0 January 22 0 Total 0 $0 $0

• Average Cost
• FIFO

Answer 1

Solution:

Computation of COGS and ending inventory - Periodic Weighted Average cost method
Particulars	Cost of goods available for sale			Cost of goods sold - Average cost			Ending Inventory - Average cost
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	92	$105.00	$9,660
Purchases:
6-Jan	62	$104.00	$6,448
15-Jan	47	$104.00	$4,888
22-Jan	37	$98.00	$3,626
Total	238	$103.45	$24,622	147	$103.45	$15,208	91	$103.45	$9,414

Computation of COGS and ending inventory - Periodic FIFO
Particulars	Cost of goods available for sale			Cost of goods sold			Ending Inventory
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	92	$105.00	$9,660	92	$105.00	$9,660.00	0	$105.00	$0.00
Purchases:
6-Jan	62	$104.00	$6,448	55	$104.00	$5,720.00	7	$104.00	$728.00
15-Jan	47	$104.00	$4,888	0	$104.00	$0.00	47	$104.00	$4,888.00
22-Jan	37	$98.00	$3,626	0	$98.00	$0.00	37	$98.00	$3,626.00
Total	238		$24,622	147		$15,380.00	91		$9,242.00

Computation of COGS and ending inventory - Periodic LIFO
Particulars	Cost of goods available for sale			Cost of goods sold			Ending Inventory
	Nos of units	Unit Cost	Cost of goods available for sale	Nos of units sold	Unit Cost	Cost of goods sold	Nos of units in ending inventory	Unit Cost	Ending inventory
Beginning inventory	92	$105.00	$9,660	1	$105.00	$105.00	91	$105.00	$9,555.00
Purchases:
6-Jan	62	$104.00	$6,448	62	$104.00	$6,448.00	0	$104.00	$0.00
15-Jan	47	$104.00	$4,888	47	$104.00	$4,888.00	0	$104.00	$0.00
22-Jan	37	$98.00	$3,626	37	$98.00	$3,626.00	0	$98.00	$0.00
Total	238		$24,622	147		$15,067.00	91		$9,555.00

LIFO method resulted in the highest dollar amount for ending inventory