\"Il Verizon 8:17 AM * 100%- edugen.wileyplus.com C 1 Kieso, Intermediate Accoun
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"Il Verizon 8:17 AM * 100%- edugen.wileyplus.com C 1 Kieso, Intermediate Accounting, 16e Gradebo ORION Downioadable eTextbook Question t Martinez Company is a multi product firm. Preserted below is information concerring one of its products, the Hawerye Date Transaction Quantity Price/Cost 11 Beginning inventory 24 Purchase 2/20 Sale 42 Purchase 1/4 Sale 3.300 4,300 4,800 ,300 4.500 $18 28 35 51 Calculate average-cost per unit (Round answer to 4 decimal places,eg 2.7613) Average-cost per unit Compute cost of goods sold, assuming Martinez uses: (Round average cest per wnit to 4 decimal placese.g 2.7631 and decimal places, eg.6.548 Cost ef goods sold a) Periodic system, FIFO cost flow (b) Perpetual system, FIFO cost flow Polia 1 9200 2017 ohn Mloy &Sons; InG All Rights Reserved. A Division of John Wlcy&5Explanation / Answer
Solution:
1)
Average Cost per Unit = Total Cost of Goods Available for Sale (refer working in 2a) / Total Units available for sale
= $365,300 / 12,900 Units
= $28.32 per unit
2-a)
Periodic Inventory System
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
$$
1/1 Beginning Inventory
3300
$18.00
$59,400
Purchases
2/4
4300
$28.00
$120,400
4/2
5300
$35.00
$185,500
Goods Available for Sale (A)
12900
$365,300
Cost of Goods Sold:
Units from Beginning Inventory
3300
$18.00
$59,400
Units from 2/4 Purchases
4300
$28.00
$120,400
Units from 4/2 Purchases
1700
$35.00
$59,500
Total Cost of Goods Sold (B)
9300
$239,300
Cost of Goods Sold Periodic system, FIFO cost flow = $239,300
2-b) Cost of Goods Sold (Perpetual system, FIFO method)
Under perpetual system, inventory is updated after each transaction whether sale or purchase of units.
Perpetual FIFO:
Goods Purchased
Cost of Goods Sold
Inventory Balance
# of units
Unit Cost
Cost per unit
# of units
Cost per unit
Cost of goods sold
# of units
Cost per unit
Inventory Balance
1/1 Beginning Inventory
3300
$18.00
$59,400
3300
$18.00
$59,400
Purchases 2/4
4300
$28.00
$120,400
3300
$18.00
$59,400
4300
$28.00
$120,400
$179,800
Sales 2/20
3300
$18.00
$59,400
0
$0.00
$0
1500
$28.00
$42,000
2800
$28.00
$78,400
4800
$101,400
$78,400
Purchases 4/2
5300
$35.00
$185,500
2800
$28.00
$78,400
5300
$35.00
$185,500
8100
$263,900
Sales 11/4
2800
$28.00
$78,400
0
$0.00
$0
1700
$35.00
$59,500
3600
$35.00
$126,000
4500
$137,900
3600
$126,000
TOTAL
$239,300
Cost of Goods Sold, Perpetual System FIFO Cost flow = $239,300
2-c) Calculation of Cost of Goods Sold (Periodic LIFO Cost flow)
LIFO method says the earliest purchased units are issued or sold first.
LIFO (Periodic)
Units
$/Unit
$$
1/1 Beginning Inventory
3300
$18.00
$59,400
Purchases
2/4
4300
$28.00
$120,400
4/2
5300
$35.00
$185,500
Goods Available for Sale (A)
12900
$365,300
Cost of Goods Sold:
Units from Beginning Inventory
0
$18.00
$0
Units from 2/4 Purchases
4000
$28.00
$112,000
Units from 4/2 Purchases
5300
$35.00
$185,500
Total Cost of Goods Sold (B)
9300
$297,500
Cost of Goods Sold, Periodic LIFO Cost flow = $297,500
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
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FIFO (Periodic)
Units
$/Unit
$$
1/1 Beginning Inventory
3300
$18.00
$59,400
Purchases
2/4
4300
$28.00
$120,400
4/2
5300
$35.00
$185,500
Goods Available for Sale (A)
12900
$365,300
Cost of Goods Sold:
Units from Beginning Inventory
3300
$18.00
$59,400
Units from 2/4 Purchases
4300
$28.00
$120,400
Units from 4/2 Purchases
1700
$35.00
$59,500
Total Cost of Goods Sold (B)
9300
$239,300
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