Sunland Company is a multi product firm. Presented below is information concerni
ID: 2564479 • Letter: S
Question
Sunland Company is a multi product firm. Presented below is information concerning one of its products, the Hawkeye.
Date
Transaction
Quantity
Price/Cost
Date
Transaction
Quantity
Price/Cost
1/1 Beginning inventory 1,800 $15 2/4 Purchase 2,800 22 2/20 Sale 3,300 37 4/2 Purchase 3,800 29 11/4 Sale 3,000 41Calculate average-cost per unit. (Round answer to 4 decimal places, e.g. 2.7613.)
Average-cost per unit
Compute cost of goods sold, assuming Sunland uses: (Round average cost per unit to 4 decimal places, e.g. 2.7631 and final answers to 0 decimal places, e.g. 6,548.)
Cost of goods sold (a) Periodic system, FIFO cost flow $ (b) Perpetual system, FIFO cost flow $ (c) Periodic system, LIFO cost flow $ (d) Perpetual system, LIFO cost flow $ (e) Periodic system, weighted-average cost flow $ (f) Perpetual system, moving-average cost flow
Explanation / Answer
Solution:
1)
Average Cost per Unit = Total Cost of Goods Available for Sale (refer working in 2a) / Total Units available for sale
= $198,800 / 8,400 Units
= $23.67 per unit
a)
Periodic Inventory Syste
It is a system of inventory in which inventories are updated on a periodic basis. Periodic basis may be monthly, quarterly, weekly, half yearly or yearly. In this system, inventories are not kept up to date.
Calculation of Cost of Goods Sold First in First Out (FIFO)
FIFO method says the oldest units in stock are issued or sold first.
FIFO (Periodic)
Units
$/Unit
$$
Beginning Inventory
1800
$15.00
$27,000
Purchases 2/4
2800
$22.00
$61,600
Purchases 4/2
3800
$29.00
$110,200
Goods Available for Sale (A)
8400
$198,800
Cost of Goods Sold
Sale from Beginning Inventory
1800
$15.00
$27,000
Sale from Purchases 2/4
2800
$22.00
$61,600
Sale from Purchases 4/2
1700
$29.00
$49,300
Total Cost of Goods Sold (B)
6300
$137,900
Cost of Goods Sold Periodic system, FIFO cost flow = $137,900
b) Cost of Goods Sold (Perpetual system, FIFO method)
Under perpetual system, inventory is updated after each transaction whether sale or purchase of units.
Perpetual LIFO:
Goods Purchased
Cost of Goods Sold
Inventory Balance
# of units
Unit Cost
Cost per unit
# of units
Cost per unit
Cost of goods sold
# of units
Cost per unit
Inventory Balance
1/1 Beginning
1800
$15
$27,000
2/4 Purchase
2800
$22
$61,600
1800
$15
$27,000
2800
$22
$61,600
2/20 Sale
1800
$15
$27,000
0
$19
$0
1500
$22
$33,000
1300
$22
$28,600
3300
$60,000
4/2 Purchases
3800
$29.00
$110,200
1300
$22
$28,600
3800
$29
$110,200
11/4 Sale
1300
$22
$28,600
0
$0
$0
1700
$29
$49,300
2100
$29
$60,900
3000
$77,900
TOTAL
6300
$137,900
Cost of Goods Sold, Perpetual System FIFO Cost flow = $137,900
2c) Calculation of Cost of Goods Sold (Periodic LIFO Cost flow)
LIFO method says the earliest purchased units are issued or sold first.
LIFO (Periodic)
Units
$/Unit
$$
Beginning Inventory
1800
$15.00
$27,000
Purchases 2/4
2800
$22.00
$61,600
Purchases 4/2
3800
$29.00
$110,200
Goods Available for Sale (A)
8400
$198,800
Cost of Goods Sold
Sale from Beginning Inventory
$0
Sale from Purchases 2/4
2500
$22.00
$55,000
Sale from Purchases 4/2
3800
$29.00
$110,200
Total Cost of Goods Sold (B)
6300
$165,200
Cost of Goods Sold, Periodic LIFO Cost flow = $165,200
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Pls ask separate question for remaining part.
FIFO (Periodic)
Units
$/Unit
$$
Beginning Inventory
1800
$15.00
$27,000
Purchases 2/4
2800
$22.00
$61,600
Purchases 4/2
3800
$29.00
$110,200
Goods Available for Sale (A)
8400
$198,800
Cost of Goods Sold
Sale from Beginning Inventory
1800
$15.00
$27,000
Sale from Purchases 2/4
2800
$22.00
$61,600
Sale from Purchases 4/2
1700
$29.00
$49,300
Total Cost of Goods Sold (B)
6300
$137,900
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