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Swan Building Supply started business at the beginning of the calendar year. Dur

ID: 2502314 • Letter: S

Question

Swan Building Supply started business at the beginning of the calendar year.  During the year, it sold 690 Model K15 fans at an average price of $340 each. A physical count reveals that 218 units are still on hand. Swan Building Supply made the following purchases during the year.

Date of purchase                             Units                     Unit Price                            Total Cost

January 10                                           255                         $195.                                     $49725.

March 14                                             210                         $198                                       $41580

May 17                                                 305                         $202                                       $61610

July 18                                                   180                         $205                                       $36900                  

Total                                                      950                                                                         $189815

Determine the cost of ending inventory of Model K15 fans by three methods.

Ending Inventory                                                                             Cost of Goods Sold

_______ 1.)       Weighted average Cost                 _______ 1.)       Weighted average Cost                 

_______ 2.)       First-in, first-out                               _______ 2.)       First-in, first-out

_______ 3.)       Last-in, First-out                               _______ 3.)       Last-in, First-out

Explanation / Answer

Determine the cost of ending inventory of Model K15 fans by three methods.

Ending Inventory Cost of Goods Sold

_______ 1.) Weighted average Cost _______ 1.) Weighted average Cost

Weighted average cost = total cost/total units = 189815/950 = 199.80526

Ending inventory = 218*199.80526 = 43557.55

Cost of goods sold = 189815 - 43557.55 = 146257.45

_______ 2.) First-in, first-out _______ 2.) First-in, first-out

The newest units are still in the ending inventory:

180 from July 18 purchase and 38 from May 17 purchase

Ending inventory = 180*205 + 38*202 = 44576

Cost of goods sold = 189815