Question

Novak Corp. uses the periodic inventory system and reports the following for the month of June.

				Units			Unit Cost			Total Cost
June 1		Inventory		440			$4			$ 1,760
12		Purchase		880			8			7,040
23		Purchase		660			12			7,920
30		Inventory		220

Calculate Weighted Average Unit Cost. (Round answer to 2 decimal places, e.g. 15.25.)

Weighted Average Unit Cost

$8.44

Compute the cost of the ending inventory and the cost of goods sold using the average-cost method. (Round answers to 0 decimal places, e.g. 1,250.)

The ending inventory		$1857
The cost of goods sold		$enter a dollar amount rounded to 0 decimal places

Will the results in (a) be higher or lower than the results under FIFO and LIFO?

Ending inventory is lower than FIFO ($enter a dollar amount) and higher than LIFO ($enter a dollar amount).

In contrast, cost of goods sold is select an higher than FIFO ($enter a dollar amount) and select an option lower than LIFO ($enter a dollar amount).

Answer 1

Hi

Let me know in case you face any issue:

Answers are highlighted in yellow: Solution: a) Weighted Average unit cost = (1760+7040+7920)/(440+880+660) = $ 8.44 WA: Date Jun.01 Jun.12 Jun.23 Goods purchased Cost of Goods Sold Ending Inventory Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost 440 $ 4.00 $ 1,760 1760 $ 8.44 $ 14,862 $ - 880 $ 8.00$ 7,040 $ - $ - 660 $ 12.00$ 7,920 $ - 220 $ 8.44 $ 1,858 $ - 1980 $ 16,720 1760 $ $ 14,862 220 or 14863 due to rounding off 1,858 or 1857 c) FIFO and LIFO amount is not shared, hence answer to last part can't be posted accurately.