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:

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. Round your final answer to two decimal places.

Beginning inventory 6 units at $70 each First purchase 10 units at $75 each Second purchase 18 units at $80 each Third purchase 10 units at $90 each

Explanation / Answer

Cost Of goods available for sale : [6*70]+[10*75]+[18*80]+[10*90]

          = 420+ 750+1440+900

             = 3510

Units available for sale :6+10+18+10 =44

average cost per unit : 3510 /44= $ 79.77273 per unit

[10*90]Third purchase+ [5*80]second purchase

900+400

1300

[6*70]beginning+[9*75]first purchase

420+675

1095

79.77273*15

1196.59

FIFO LIFO Avergae cost Under FIFO units acquired first are sold first so ending inventory are left from last purchase under LIFO ,units acquired last are sold first so ending inventory are left from begining balance at average cost Ending inventory

[10*90]Third purchase+ [5*80]second purchase

900+400

1300

[6*70]beginning+[9*75]first purchase

420+675

1095

79.77273*15

1196.59

ending inventory (ans) 1300 (par ta) 1095(part b) 1196.59 (part c)

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