Rainey Company sells coffee makers used in business offices. Its beginning inven
ID: 2424975 • Letter: R
Question
Rainey Company sells coffee makers used in business offices. Its beginning inventory of coffee makers was 200 units at $25 per unit. During the year, Rainey made two batch purchases of coffee makers. The first was a 300-unit purchase at $30 per unit; the second was a 250-unit purchase at $35 per unit. During the period, Rainey sold 700 coffee makers.
References
eBook & Resources
Rainey Company sells coffee makers used in business offices. Its beginning inventory of coffee makers was 200 units at $25 per unit. During the year, Rainey made two batch purchases of coffee makers. The first was a 300-unit purchase at $30 per unit; the second was a 250-unit purchase at $35 per unit. During the period, Rainey sold 700 coffee makers.
Explanation / Answer
Brief:
1) Rainy sells Coffee makers used in business offices
2) The start of the inventory there are 200 coffee makers purchased at $25
3) First purchase in that year is Units300 at $30 per unit
4) Second purchase is Units 250 at $35 per unit
5) Number of coffee makers sold during that period is 700
1) Amount of Product costs
The amount for the product costs are applicable to the manufacturing sector. The additional information that will be necessary to derive at a conclusion is as below:
a) Hourly overhead costs
b) Hourly wages
c) Hourly rate
d) Time taken to produce one unit product
e) total material costs
f) compute total cost price
If the above information is procured from the manufacturer the COGM cycles can be computed as required in the above case the product is directly with the distributor so the above information is required to calculate the product cost
2)Allocate the product costs to the costs of goods sold and ending inventory, assuming rainey uses:
a) FIFO: FIFO or first in first out is an accounting comutation methodology in which the goods that enter the inventory first are sold out first.
i) Cost of goods sold
In the above scenario the FIFO is divided across three batches of procurement
ii) Ending Inventory: Ending inventory is the total number of goods and the value of goods available for sale at the end of the accounting period
b) LIFO: Last in first out (LIFO) Methodology the goods that enter the inventory last are sold out first
i) Cost of goods sold
ii) Ending Inventory
c) Weighted Average: Is a computing method where the inventory valuation is taken at random. It is used when the all the inventory items that are produced/procured are mixed up. It is also used when there is no sufficient technology that is involved to track the LIFO and FIFO methodologies
i) Cost of goods sold
The weighted average method uses the total value of all the units / total number of units=(22750/750)=30.33 per unit.
The total number of units sold is 700 so the cost is 700*30.33=21231
ii) Ending inventory
S.No No of Units price per unit total price total number of units sold cost of goods sold 1 200 25 5000 200*25 5000 2 300 30 9000 300*30 9000 3 250 35 8750 200*35 7000 700 21000Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.