Question

Exercise 5-18 Allocating product cost between cost of goods sold and ending inventory: Multiple purchases LO 5-6 Cortez Company sells chairs that are used at computer stations. Its beginning inventory of chairs was 180 units at $43 per unit. During the year, Cortez made two batch purchases of this chair. The first was a 260-unit purchase at $48 per unit; the second was a 390-unit purchase at $50 per unit. During the period, it sold 490 chairs. Required Determine the amount of product costs that would be allocated to cost of goods sold and ending inventory, assuming that Cortez uses FIFO. LIFO. Weighted average. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)

Required
Determine the amount of product costs that would be allocated to cost of goods sold and ending inventory, assuming that Cortez uses

1. FIFO.
2. LIFO.
3. Weighted average. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)

Find

	FIFO	LIFO	Weighted Average
Cost of goods	$	$	$
Ending Inventory	$	$	$

Answer 1

Solution:

	FIFO	LIFO	Weighted average
Cost of goods sold	22,720	24,300	23,449
Ending Inventory	17,000	15,420	16,271

Working:

	Units	Per unit price
Beginning	180	43
First Purchase	260	48
Second Purchase	390	50

FIFO: COGS

Units	Per unit price	Total
180	43	7,740
260	48	12,480
50	50	2,500
490		22,720

FIFO: Ending inventory

Units	Per unit price	Total
340	50	17,000

LIFO: COGS

Units	Per unit price	Total
390	50	19,500
100	48	4,800
490		24,300

LIFO: Ending inventory

Units	Per unit price	Total
180	43	7,740
160	48	7,680
		15,420

Weighted average: COGS

	Units	Per unit price	Total
Beginning	180	43	7,740
First Purchase	260	48	12,480
Second Purchase	390	50	19,500
	830		39,720

Per unit price = 39720 / 830 = 47.86

COGS = 490 * 47.86 = 23,449.16

Ending inventory: 340 * 47.86 = 16,270.84