To illustrate the different inventory cost flow assumptions, consider the follow

Question

To illustrate the different inventory cost flow assumptions, consider the following example of Russell Company, which purchased inventory at three different times at three different prices. Russell purchased a total of 75 units, which cost a total of $1,350. On May 31st a customer purchased 25 units. Russell's selling price was $26 per-unit. Fill in the table below, calculate Russell Company's sales revenue, cost of goods sold, gross profit and ending inventory balance under each of the three inventory cost flow assumptions. Round your answer to the nearest dollar. However, do not round intermediate calculations.

Explanation / Answer

FIFO LIFO Average Cost Revenue                            650                                   650                         650 Cost of goods sold                            325                                   575                         450 Gross Profit                            325                                     75                         200 Ending Inventory                        1,025                                   775                         900

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