Causwell Company began 2018 with 23,000 units of inventory on hand. The cost of

Question

Causwell Company began 2018 with 23,000 units of inventory on hand. The cost of each unit was $5.00. During 2018 an additional 40,000 units were purchased at a single unit cost, and 33,000 units remained on hand at the end of 2018 (30,000 units therefore were sold during 2018). Causwell uses a periodic inventory system. Cost of goods sold for 2018, applying the average cost method, is $174,000. The company is interested in determining what cost of goods sold would have been if the FIFO or LIFO methods were used Required 1. Determine the cost of goods sold for 2018 using the FIFO method. [Hint: Determine the cost per unit of 2018 purchases.] 2. Determine the cost of goods sold for 2018 using the LIFO method. (Do not round intermediate calculations.) FIFO cost of goods sold LIFO cost of goods sold

Explanation / Answer

Cost of goods available = (174000/30000)*63000= 365400 Cost of 2018 pruchases=365400-(23000*5)= 250400 Unit Cost of 2018 pruchases=250400/40000= 6.26 a FIFO cost of goods sold=(23000*5)+(7000*6.26)= 158820 b LIFO cost of goods sold=30000*6.26= 187800

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