Question

Inventory Costing Methods-Periodic Method The following data are for the Portet Corporation, which sells just one product: Units Unit Cost Beginning Inventory, January 1 1.200 $13 Purchases: February 11 1,500 May 18 1,400 October 23 1,100 17 Sales: March 1 1,400 July 1 1,400 October 291,000 Calculate the value of ending inventory and cost of goods sold at year-end using the periodic method and (a) first-in, first-out, (b) last-in, first-out, and (c) weighted average cost method. Hint: For weighted-average cost, round the cost per unit to 3 decimal places and round your final answers to the nearest dollar. a. First-in, First-out: Ending Inventory $ Cost of goods sold $ b. Last-in, first-out: Ending Inventory $ Cost of goods sold $ 0x Weighted Average Ending Inventory $ 0x Cost of goods sold $

Answer 1

In periodic method cost of goods sold and ending inventory is calculated at the end of period, ignoring actual physical availability of goods

a) Periodic FIFO method

		Units
January 1	Opening Inventory	1200
February 11	Purchase	1500
May 18	Purchase	1400
October 23	Purchase	1100
		4000
March 1	Sales	1400
July 1	Sales	1400
October 29	Sales	1000
		3800
Ending inventory		=1200+4000-3800=1400 units

Ending inventory = 1100 units purchased on October 23 and 300 units purchased on May 18

Ending inventory = (1100*17) + (300 *15) = $ 23,200

Sold units = 1200 units of opening inventory, 1500 units purchased on February 11 and balance 1100 units purchased on May 18

Cost of goods sold = (1200*13)+(1500*14)+(1100*15) =$ 53,100

b) Periodic LIFO method

Ending inventory = 1200 units of opening inventory and 200 units of goods purchased on February 11

Ending inventory = (1200 * 13) + (200 *14) = $ 18,400

Sold units = 1300 units purchased on February 11, 1400 units purchased on May 18 and 1100 units purchased on October 23

Cost of goods sold = (1300*14) + (1400*15) + (1100* 17) = $ 57,900

c) Periodic Weighted average cost method

Weighted average cost per unit =Total cost / Total units

= (1200 * 13) +(1500*14) + (1400*15)+(1100*17) / (1200+1500+1400+1100)

= $ 14.673

Ending inventory = Ending inventory units * Weighted average cost per unit

Ending inventory = 1400 * 14.673 = $ 20,542

Cost of goods sold = Sold units * Weighted average cost per unit

Cost of goods sold = 3800 * 14.673 = $ 55,758