The beginning inventory and purchases of an item for the period were as follows:

Question

The beginning inventory and purchases of an item for the period were as follows: Beginning inventory 6 units at $70 each First purchase 10 units at $75 each Second purchase 18 units at $80 each Third purchase 10 units at $85 each The company uses the periodic system, and there were 15 units in the inventory at the end of the period. Determine the cost of the 15 units in the inventory by each of the following methods, presenting details of your computations: (a) first-in, first-out; (b) last-in, first-out; (c) average cost.

Explanation / Answer

Fifo: 10 units @ $85, 5 units @ $80. The last units purchased are those in ending inventory. Lifo: 6 @ $70, 9 @ $75. The ending inventory is the earliest units. Avg Cost: 15 units @ $78.64. Average cost = (420 + 750 + 1440 + 850)/44

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