Question

Inventory Costing Methods-Periodic Method
Merritt Company uses the periodic inventory system. The following May data are for an item in Merritt's inventory:

May	1	Beginning inventory	164	units @	$30	per unit
	12	Purchased	140	units @	$35	per unit
	16	Sold	220	units @
	24	Purchased	300	units @	$36	per unit

Calculate the cost of goods sold for May and ending inventory at May 31 using (a) first-in, first-out, (b) last-in, first-out, and (c) the weighted-average cost methods.

Do not round until your final answers. Round your final answers to the nearest dollar.

A.	First-in, First-out:
	Ending Inventory	$
	Cost of Goods Sold:	$
B.	Last-in, first-out:
	Ending Inventory	$
	Cost of Goods Sold:	$
C.	Weighted-average cost:
	Ending Inventory	$
	Cost of Goods Sold	$

Answer 1

Part A

Total units available = may 1 beginning inventory + may 12 purchase + may 24 purchase = 164+140+300 = 604 units

Units sold on may = 220

Ending inventory (in units) = total units available – units sold = 604-220 = 384 units

In FIFO, for units sold units will be taken from beginning inventory, then from first purchase and then from second purchase

Ending inventory = (84*35)+(300*36) = $13740

Cost of goods sold = (164*30)+(56*35) = $6880

Part B

In LIFO, for units sold units will be taken from second purchase, then from first purchase and then from beginning inventory.

Ending inventory = (164*30)+(140*35)+(80*36) = $12700

Cost of goods sold = (220*36) = $7920

Part C

Weighted average cost per unit= cost of units available / total units = ((164*30)+(140*35)+(300*36))/(164+140+300) = 34.13907

Ending inventory = 384*34.13907 = $13109

Cost of goods sold = 220*34.13907 = $7511

Therefore

A	First-in, First-out:
	Ending Inventory	$13740
	Cost of Goods Sold	$6880
B	Last-in, first-out:
	Ending Inventory	$12700
	Cost of Goods Sold	$7920
C	Weighted-average cost:
	Ending Inventory	$13109
	Cost of Goods Sold	$7511