Question

Concord Corporation markets CDs of numerous performing artists. At the beginning of March, Concord had in beginning inventory 2.500CDs with a unit cost of $6. During March, Concord made the following purchases of CDs. March 2,200 March 13 3,900 $7 $8 March 21 5.200 March 26 2,200 $9 $30 During March 12.200 units were sold. Concord uses a periodic inventory system Determine the cost of goods able for sale The cost of ads available for sale $ 130100 Calculate werage Cost. Round answer to 3 decimal places. 5.125 Average cost $ eTextbook and Media List of Accounts Determine (1) the ending inventory and (2) the cost of goods sold under each of themed cost methods irLirodavera-cost Round ers to decimal 125 FIFO LIFO AVERAGE-COST The ending inventory The cost of goods sold

Answer 1

Answer a.

Cost of goods available for sale = 2,500 * $6.00 + 2,200 * $7.00 + 3,900 * $8.00 + 5,200 * $9.00 + 2,200 * $10.00
Cost of goods available for sale = $130,400

Answer b.

Number of units available for sale = 2,500 + 2,200 + 3,900 + 5,200 + 2,200
Number of units available for sale = 16,000

Average cost per unit = Cost of goods available for sale / Number of units available for sale
Average cost per unit = $130,400 / 16,000
Average cost per unit = $8.15

Answer c.

FIFO:

Cost of goods sold = 2,500 * $6.00 + 2,200 * $7.00 + 3,900 * $8.00 + 3,600 * $9.00
Cost of goods sold = $94,000

Cost of ending inventory = Cost of goods available for sale - Cost of goods sold
Cost of ending inventory = $130,400 - $94,000
Cost of ending inventory = $36,400

LIFO:

Cost of goods sold = 2,200 * $10.00 + 5,200 * $9.00 + 3,900 * $8.00 + 900 * $7.00
Cost of goods sold = $106,300

Cost of ending inventory = Cost of goods available for sale - Cost of goods sold
Cost of ending inventory = $130,400 - $106,300
Cost of ending inventory = $24,100

Average Cost:

Cost of goods sold = Average cost per unit * Number of units sold
Cost of goods sold = $8.15 * 12,200
Cost of goods sold = $99,430

Cost of ending inventory = Cost of goods available for sale - Cost of goods sold
Cost of ending inventory = $130,400 - $99,430
Cost of ending inventory = $30,970

Answer d.

FIFO produces the highest inventory amount.
LIFO produces the highest cost of goods sold.