Causwell Company began 2018 with 22,000 units of inventory on hand. The cost of

Question

Causwell Company began 2018 with 22,000 units of inventory on hand. The cost of each unit was $6.00. During 2018 an additional 42,000 units were purchased at a single unit cost, and 32,000 units remained on hand at the end of 2018 (32,000 units therefore were used. sold during 2018). Causwell uses a periodic inventory system. Cost of goods sold for 2018, applying the average cost method, is $225,600. The company is interested in determining what cost of goods sold would have been if the FIFO or LIFO methods were 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 s LIFO cost of goods sold

Explanation / Answer

Answer :-

Average cost per unit = (Cost of goods sold/units sold) = $225600/32000 units = $7.05

1 Answer:- FIFO cost of goods sold

2 Answer :- LIFO cost of goods sold

Average Cost Available for sale Cost of goods sold Ending Inventory Beginning 22000 units @ $6 = $132,000 Purchase 42000 units @ $7.60 = $319200 Total 64000 units @ $7.05 = $451,200 32000 units @ $7.05 = $225600 32000 units @ 7.05 = $225600

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