Problem 1. Maple Company started the year with no inventory. During the year, it

Question

Problem 1. Maple Company started the year with no inventory. During the year, it purchased two identical inventory items at different times. The first unit cost $800 and the second, $700. One of the items was sold during the year.

Required:

Based on this information, how much product cost would be allocated to cost of goods sold and ending inventory, assuming use of:

a. LIFO
b. FIFO
c. Weighted average

   

Cost of goods sold

Ending inventory

LIFO

FIFO

Weighted Average

Cost of goods sold

Ending inventory

LIFO

FIFO

Weighted Average

Explanation / Answer

Under LIFO, units acquired last are sold first ,so ending inventory are left from initial purchase

Under FIFO ,units acquired first are sold first ,so ending inventory are left from last purchase.

weighted average cost : [800+700]/2 units

              = $ 750

cost of goods sold Ending inventory LIFO 700 800 FIFO 800 700 weighted average 750     [750*1] 750    [750*1]

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