Inventory by Three Cost Flow Methods Instructions: 1. Determine the cost of the

Question

Inventory by Three Cost Flow Methods

Instructions:

1. Determine the cost of the inventory on December 31, 20Y7, by the first-in, first-out method.

If the inventory of a particular model comprises one entire purchase plus a portion of another purchase acquired at a different unit cost, use a separate line for each purchase. Under FIFO, if a model is in inventory at two different costs, enter the remaining units that were purchased most recently first.

2. Determine the cost of the inventory on December 31, 20Y7, by the last-in, first-out method, following the procedures indicated in (1). Under LIFO, if a model is in inventory at two different costs, enter the remaining units that were purchased earliest first.

3. Determine the cost of the inventory on December 31, 20Y7, by the average cost method.

First-In, First-Out Method Model Quantity Unit Cost Total Cost 101Sx $ $       256Br             378Wh       590Pm             661Qu             828Ts       913Vn       Total $

Explanation / Answer

1.

Explanation: In case of the first item, 101SX, there are 9 units at the year end, since we are using FIFO, we consider that the purchases whihc are made are last are available at year end, hence 6 units purchased @225 and 3 units @222 are in inventory

2.  LIFO:

Under LIFO, items purchased last are issued first, hence 101SX is valued at the beginning price of $213 per unit

3. Average cost:

Average cost for each product is calculated as follows:

First-In, First-Out Method Model Quantity Unit Cost Total Cost $ $ 101Sx 6 225 1350 3 222 666 Inventory cost 9 2016 256Br 4 140 560 4 130 520 Inventory cost 8    1080 378Wh 4 317 1268 590Pm 2 535 1070 2 530 1060 4 2130 661Qu 6 542 3252 1 549 549 7 3801 828Ts 2 232 464 913Vn 12 39 468 Total 46 11227

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