a.)Zimmerman Corp. had 1,500 units of part M.O. on hand May 1, 2010, costing $21

Question

a.)Zimmerman Corp. had 1,500 units of part M.O. on hand May 1, 2010, costing $21 each. Purchases of part M.O. during May were as follows.

Units Unit Cost
May 9 2,000 $22.00
17 3,500 23.00
26 1,000 24.00

A physical count on May 31, 2010, shows 2,000 units of part M.O. on hand. Using the FIFO method, what is the cost of part M.O. inventory at May 31, 2010? Using the LIFO method, what is the inventory cost? Using the average cost method, what is the inventory cost?

FIFO inventory cost $
LIFO inventory cost $
Average cost $

b.)Ashbrook Company adopted the dollar-value LIFO method on January 1, 2010 (using internal price indexes and multiple pools). The following data are available for inventory pool A for the 2 years following adoption of LIFO.

Inventory At Base-Year Cost At Current-Year Cost

1/1/10 $200,000 $200,000
12/31/10 240,000 264,000
12/31/11 256,000 286,720
Computing an internal price index and using the dollar-value LIFO method, at what amount should the inventory be reported at December 31, 2011?

Price index (12/31/10)
Price index (12/31/11)
Dollar-value LIFO inventory (12/31/10) $
Dollar-value LIFO inventory (12/31/11) $

c.)Donovan Inc., a retail store chain, had the following information in its general ledger for the year 2010.
Merchandise purchased for resale $909,400
Interest on notes payable to vendors 8,700
Purchase returns 16,500
Freight-in 22,000
Freight-out 17,100
Cash discounts on purchases 6,800

What is Lindros' inventoriable cost for 2010?

Explanation / Answer

FIFO inventory cost 1000 units @ $24.00      $24,000
                                 500 units @ $23.00      $11,500
                                500 units @ $22.00     $11,000
                               2000 units                   $46,500
                              =====                          ========

LIFO inventory cost 1,500 units @ $21          $31,500
                                   500 units @ $22          $11,000
                              _____________________________  
                               2,000 units                   $42,500
                              =============================
Average cost $
Total Value = (1,500 x $21) + (2,000 x $22) + (500 x $23) + (1,000 x $24)
= $111,000
Average cost = $111,000 / 5,000 units = $22.20 per unit
Average cost for 2,000 units = 2,000 x $22.20 = $44,400

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