The following data was obtained from the inventory records of Caleb Company for

Question

The following data was obtained from the inventory records of Caleb Company for the month of March:

                March 1             Beginning inventory                                      1,250 units @ $ 2 each

                March 8                             Purchased                                            800 units @ $ 3 each

                March 22                           Purchased                                            720 units @ $ 4 each

                March 31                           Sold                                                                        2,400 units

Calculate the cost of goods sold on March 31, using b) FIFO valuation method

c) LIFO valuation method

d) Weighted-average valuation method

Explanation / Answer

a) FIFO Cost of goods sold Units Unit cost Total Sale from beginning inventory 1250 2 2500 Sale from March 8 800 3 2400 Sale from March 22 350 4 1400 2400 6300 Cost of goods sold= $6300 b) LIFO Cost of goods sold Units Unit cost Total Sale from purchase march 22 720 4 2880 Sale form purchase march 8 800 3 2400 Sale from beginning inventory 880 2 1760 2400 7040 Cost of goods sold=$7040 c)Weighted Average cost: Units available for sale= 1250+800+720=2770 Units sold=2400 Average cost per unit= cost of goods available for sale/total units available                                             =(1250*2+800*3+720*4)/2770= 7780/2770=2.81 Cost of goods sold=2400*2.81= $6744

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