Exercise 218 Plato Company reports the following for the month of June. Calculat

Question

Exercise 218

Plato Company reports the following for the month of June.

Calculate the cost of the ending inventory and the cost of goods sold for each cost flow assumption, using a perpetual inventory system. Assume a sale of 570 units occurred on June 15 for a selling price of $8 and a sale of 600 units on June 27 for $9. (Round average cost per unit to 3 decimal places, e.g. 5.254 and final answers to 0 decimal places, e.g. 2,520.)

Date Explanation Units Unit Cost Total Cost June 1 Inventory 225 $5 $1,125 12 Purchase 525 6 3,150 23 Purchase 750 7 5,250 30 Inventory 330

Explanation / Answer

Solution :

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Moving average method :

First in First out Method Date Purchases Cost of goods sold Balance 1-Jun 225X5= 225 units , $ 1125 12-Jun 525X6= 3150 225X5 + 525X6= 750 units, $ 4275 15-Jun 225 X $ 5 + 345 X $6 = $ 3195 180 units X $ 6 = $ 1080 23-Jun 750 X 7 = 5250 180 X $ 6 + 750 X $ 7 = 930 units , $ 6330 27-Jun 180 X $ 6 + 420 X $ 7 = $ 4020 330 units X $ 7 = $ 2310 Cost of goods sold = $ 7215 Cost of ending inventory = $ 2,310

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