The beginning inventory and purchases of an item for the period were as follows:
ID: 2488569 • Letter: T
Question
The beginning inventory and purchases of an item for the period were as follows: Beginning inventory 10 units at $70 each First purchase 7 units at $75 each Second purchase 20 units at $80 each Third purchase 18 units at $85 each The company uses the periodic system, and there were 19 units in the inventory at the end of the period. Determine the cost of the 19 units in the inventory by each of the following methods, presenting details of your computations: (a) first-in, first-out; (b) last-in, first-out; (c) average cost.
Explanation / Answer
(a) first-in, first-out
Beginning inventory 10 units at $70 each = 700
first purchase 7 units at $75 each = 525
Second purchase 20 units at $80 each =1600
Third purchase 18 units at $85 each = 1530
ending inventory is 19 units
1 unit 80 = 80
18 units 85 = 1530
total ending inventory = 1610
(b) last-in, first-out
10*70= 700
7*75=525
2*80= 160
total = 1385
(c) average cost.
total purchases and begining balance
4355/55 = 79.182
19*79.182 = 1504.458
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