The beginning inventory and purchases of an item for the period were as follows:

Question

The beginning inventory and purchases of an item for the period were as follows: Beginning inventory 9 units at $75 each First purchase 10 units at $72 each Second purchase 18 units at $74 each Third purchase 10 units at $75 each The company uses the periodic system, and there were 15 units in the inventory at the end of the period. Determine the cost of the 15 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 1120 =(10*75)+(5*74) b Last-in, first-out 1107 =(9*75)+(6*72) c Units Unit cost Total cost Beginning inv 9 75 675 First purchase 10 72 720 Second purchase 18 74 1332 Third purchase 10 75 750 Total 47 3477 Average cost = 3477/47= $73.979 Average cost ending inventory 1110 =15*73.979

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