Question

Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, the October 9 sale consisted of 55 units from beginning inventory and 185 units from the October 5 purchase; the October 29 sale consisted of 35 units from the October 18 purchase and 75 units from the October 25 purchase. (Round your average cost per unit to 2 decimal places.)

Answer 1

Answer:

Ending inventory:

(a) specific identification = $5,885

(b) weighted average = $5,960

(c) FIFO = $5,750

(d) LIFO = $5,845

Explanation:

Date        Activity                 Units       Cost        Total

Oct. 1       Beg. inventory     155          $14          $2,170

Oct. 5      Purchase              180         $13.50     $2,430  

Oct. 9      Sales                     240

Oct. 18     Purchase              140         $13          $1,820

Oct. 29    Sales                     110

Oct. 25    Purchase              330        $12.50     $4,125

total         Purchases            805        $13.10      $10,545                              

Cost of goods sold:

(a) specific identification = [(55 x $14) + (185 x $13,50)] + [(35 x $13) + (75 x $12.50)] = $4,660

(b) weighted average = $13.10 x 350 units = $4,585

(c) FIFO = (155 x $14) + (85 x $13.50) + (95 x $13.50) + (15 x $13) = $4,795

(d) LIFO = (180 x $13.50) + (60 x $14) + (110 x $13) = $4,700

Ending inventory:

(a) specific identification = $10,545 - $4,660 = $5,885

(b) weighted average = $10,545 - $4,585 = $5,960

(c) FIFO = $10,545 - $4,795 = $5,750

(d) LIFO = $10,545 - $4,700 = $5,845