The clayton music company was formed on december 1, 2010. The following informat

Question

The clayton music company was formed on december 1, 2010. The following information is available from clayrons inventory records

Balance at january 1 2011 4800 units at 14.25
Purchases:
January 17 2011 9000 units at 15.00
March 12, 2011 7200 units at 16.50
June 23, 2011 5600 units at 15.75
November 15 2011 5400 units at 17.25

The company uaes a periodic inventory system and a physical inventory on november 30 201 shows 9600 units on hand. Prepare schedules to compute the ending inventory at november 30 2011 under each of the following

Fifo, lifo and average cost

Explanation / Answer

Value of ending Inventory:

1. FIFO(Units purchased the lastest shall remain in stock)

= 5400 units @ $17.25 per unit = $93150

+ 4200 units @ $15.75 per unit = $66150

Total value using FIFO method = $93150 + $66150 = $159300

2. LIFO (units purchased first shall remain in stock):

= 4800 units @ $14.25 per unit = $68400

+ 4800 units @ $15 per unit = $72000

Total value using LIFO method = $68400 + $72000 = $140400

3. Average cost per unit = (4800*14.25 + 9000*15 + 7200*16.50 + 5600*15.75 + 5400*17.25) / (4800+9000+7200+5600+5400)

= (68400 + 135000 + 118800 + 88200 + 93150) / 32000

= $15.74 per unit

Value of inventory = 9600 * 15.74 = $151104 (approx)

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