Question

Find the inventory values using (a) the weighted-average method, (b) the FIFO method, and (c) the LIFO method. Round to the nearest dollar. (15 pts)

Purchases                                                   

Beginning inventory: 100 units at $1.77

May:                            150 units at $2.79

August:                        250 units at $1.08

October:                      220 units at $2.60

Remaining in inventory: 540 units

Answer 1

working :

first let us know the units sold:

=>beginning inventory + purchases - remaining inventory

=>100 + 150 + 250+220 - 540

=>180 units.

now

a.weighted average method:

weighted average cost = (100*$1.77) + (150*$2.79) + (250*$1.08)+ (220 * $2.60) / (100+150+250+220)

=>177+418.50+270+572 / 720

=>1437.50/720

=>$ 2.00 per unit.

cost of ending inventory = $2.00*540 =>$1,080.

b.FIFO method:

out of 180 units sold 100 units will be from beginning inventory.

remaining 80 units will be from may purchase

so,

540 units remaining in inventory =(150-80 sold)=>70 units from may purchase.

250 from august purchase, 220 from october purchase.

value = (70*2.79) + (250*1.08) +(220*2.60)

=>195.30+270+572

=>$1,037.

c. LIFO.

180 units sold will be from october purchase in this case.

so remaining (220-180 sold )=>40 units will be in ending inventory.

value of ending inventory = (100*$1.77) +(150*$2.79) +(250*$1.08) +(40*$2.60).

=>177+418.50+270+104

=>$970.