The following information is available for Flip Company: Beginning inventory 600

Question

The following information is available for Flip Company:

Beginning inventory               600 units at $5

First purchase                          900 units at $6

Second purchase                     500 units at $7.25

Assume that Flip uses a periodic inventory system and that there are 700 units left at the end of the month. (Round all final answers to the nearest dollar.)

Instructions:

a. Compute the cost of goods available for sale.

b. Compute the value of ending inventory and Cost of Good Sold under the

(1) LIFO method.

(2) FIFO method.

        (3) Average-cost method

Explanation / Answer

a. COGS available for sale = 600*5+900*6+500*7.25=$12025

Unit Sales = 2000-700=1300

b.)LIFO =>

COGS = 500*7.25+800*6=$8425

Ending Inventory= COGS available for sale-COGS=12025-8425=$3600

FIFO =>

COGS = 600*5+700*6=7200

Ending Inventory = COGS available for sale-COGS=12025-7200=4825

Average Cost=>

Average COst per unit = COGS Avaialble for Sale/Units available for sale=12025/2000=6.0125

COGS=1300*6.0125=7816.25

Ending Inventory=700*6.0125=4208.75

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