Question

Question 4 View Policies Current Attempt in Progress Whispering Winds Company uses the periodic inventory method and had the following inventory Information available Units 1/1 118 Beginning Inventory Purchase Unit Cost $4 $5 Total Cost $472 2,950 590 1/20 7/25 10/20 Purchase 118 826 Purchase 354 1,180 2,832 $7,080 A physical count of inventory on December 31 revealed that there were 413 units on hand. Answer the following independent questions. (Round average cost per unit to 2 decimal places, e.g. 5.25 and final answers to decimal places.ee 2.520) Assume that the company uses the FIFO method. The value of the ending inventory at December 31 is Assume that the company uses the average cost method. The value of the ending inventory on December 31 is Assume that the company uses the LIFO method. The value of the ending Inventory on December 31 is 4. Determine the difference in the amount of income that the company would have reported if it had used the FIFO method instead of the LIFO methods 4.(b) Would income have been greater or less?

Answer 1

1	FIFO	Ending Inventory $3,245
		Units	Unit Cost	Total Cost
		354	$8	$2,832
		59	$7	$413
		413		$3,245
2	Average	Ending Inventory $2,478
	Inventory cost per unit = $7,080/1,180 = $6
		Units	Unit Cost	Total Cost
		413	$6	$2,478
3	LIFO	Ending Inventory $1,947
		Units	Unit Cost	Total Cost
		118	$4	$472
		295	$5	$1,475
		413		$1,947
4
(a)	$1,298	($3,245 - $1,947)
(b)	Greater