(cick the icon to view the accounting records) At October 31, 11 of these progra

Question

(cick the icon to view the accounting records) At October 31, 11 of these programs are on hand cost of goods sold and ending inventory, using each of the following methods onhand at the end a. Spedic unit cost with seven $160 units and four $170units s b. Average cost 2. Which methiod produces the highest cost of goods sold? Whikch method produces the lowest cost of goods sold? Whuat causes the diference in cost of goods sold? Number FIFO LIFO Data Tabie Ending Invenory 10 nts@$ 10 $ 1,600 §urts@ 161.80s: 14 uns @ 178$ 2.380 Oct 1 Beginning inventory 15 Purchase 26 Puschase What causes the difterence in cost of goods solr

Explanation / Answer

Req 1 Beginning Inventory 10 units@160 1600 Purchases 15-Oct 5 units@ 161 805 20-Oct 14 units@170 2380 Total cost 4785 Average cost = Total cost / Total units = (1600+805+2380)/(10+5+14) = 165 per unit Ending inventory Specific Identification 1800 (7 units@160 and 4 units@170) Average cost 1815 (11 units@165) FIFO 1870 (11 units@170) LIFO 1761 (10 units@160 and 1 unit @161) COGS= Total cost available - Ending inventory Specific Identification = 4785- 1800 = $ 2985 Average =4785-1815 = $ 2970 FIFO = 4785-1870 = $2915 LIFO =4785- 1761 = 3024 Specific Average FIFO LIFO COGS 2985 2970 2915 3024 Ending Inventory 1800 1815 1870 1761 Req 2: LIFO gives higher cost of goods sold FIFO gives the lowest cost of goods sold The difference in two cost identified above is caused by the RISE IN PRICES

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