The units of an item available for sale during the year were as follows: Jan 1 I

Question

The units of an item available for sale during the year were as follows:

Jan 1 Inventory 27 units at $120
Feb 17 Purchase 54 units at $138
July 21 Purchase 63 units at $156
Nov 23 Purchase 36 units at $165


There are 50 units of the item in the physical inventory at December 31. The periodic inventory system is used.
a. Determine the inventory cost by the first-in, first-out method.
$

b. Determine the inventory cost by the last-in, first-out method.
$

c. Determine the inventory cost by the average cost method.
$

Explanation / Answer

a. Determine the inventory cost by the first-in, first-out method. 36 x $165 = $5,940 14 x $156 = $2,184 Total $8,124 b. Determine the inventory cost by the last-in, first-out method. 27 x $120 = $3,240 23 X $138 = $3,174 Total $6,414 c. Determine the inventory cost by the average cost method. 27 x 120 = $3,240 54 x 138 = $7,452 63 x 156 = $9,828 36 x 165 = $5,940 Total 180 units - 26,460 Average cost = $147 Cost of ending inventory = 50 x $147 = 7,350

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