Exercise 5-18 Allocating product cost between cost of goods sold and ending inve
ID: 2421337 • Letter: E
Question
Exercise 5-18 Allocating product cost between cost of goods sold and ending inventory: Multiple purchases LO 5-6
Suggs Company sells coffee makers used in business offices. Its beginning inventory of coffee makers was 170 units at $43 per unit. During the year, Suggs made two batch purchases of coffee makers. The first was a 290-unit purchase at $48 per unit; the second was a 385-unit purchase at $50 per unit. During the period, Suggs sold 810 coffee makers.
Determine the amount of product costs that would be allocated to cost of goods sold and ending inventory, assuming that Suggs uses
Weighted average
Exercise 5-18 Allocating product cost between cost of goods sold and ending inventory: Multiple purchases LO 5-6
Suggs Company sells coffee makers used in business offices. Its beginning inventory of coffee makers was 170 units at $43 per unit. During the year, Suggs made two batch purchases of coffee makers. The first was a 290-unit purchase at $48 per unit; the second was a 385-unit purchase at $50 per unit. During the period, Suggs sold 810 coffee makers.
Explanation / Answer
Closing inventory = inventory at beginning + purchases – sale
= 170 + (290 + 385) - 810
=35 units
FIFO
Cost of ending inventory = 35 units *50 = $1750
Units
Price
Amount
Beginning inventory
170
43
7310
Add- Purchase (Batch 1)
290
48
13920
Add- Purchase (Batch 2)
385
50
19250
Less- ending inventory
35
50
1750
Cost of goods sold
38730
LIFO
Cost of ending inventory = 35 units *43 = $1505
Units
Price
Amount
Beginning inventory
170
43
7310
Add- Purchase (Batch 1)
290
48
13920
Add- Purchase (Batch 2)
385
50
19250
Less- ending inventory
35
43
1505
Cost of goods sold
38975
Weighted average
Cost of ending inventory = 35 units *47.90 = $1676.50
Units
Price
Amount
Beginning inventory
170
43
7310
Add- Purchase (Batch 1)
290
48
13920
Add- Purchase (Batch 2)
385
50
19250
Less- ending inventory
35
47.90
1676.50
Cost of goods sold
38803.50
Units
Price
Amount
Beginning inventory
170
43
7310
Add- Purchase (Batch 1)
290
48
13920
Add- Purchase (Batch 2)
385
50
19250
Less- ending inventory
35
50
1750
Cost of goods sold
38730
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