Question

Problem 6-2A (Part Level Submission)

Buffalo Industries markets CDs of numerous performing artists. At the beginning of March, Buffalo Industries had in beginning inventory 2,670 CDs with a unit cost of $7. During March, Buffalo Industries made the following purchases of CDs.

March 5		2,040		@		$8		March 21		5,150		@		$10
March 13		3,820		@		$9		March 26		1,930		@		$11

During March 12,440 units were sold. Buffalo Industries uses a periodic inventory system.

Determine (1) the ending inventory and (2) the cost of goods sold under each of the assumed cost flow methods (FIFO, LIFO, and average-cost). (Round answers to 0 decimal places, e.g. 125.)

		FIFO		LIFO		AVERAGE-COST
The ending inventory		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount
The cost of goods sold		$enter a dollar amount		$enter a dollar amount		$enter a dollar amount

Answer 1

Solution:

	FIFO	LIFO	Average Cost
Ending Inventory	$33,630	$22,690	28861
Cost of Goods Sold	$108,490	$119,430	113259

Refer working below (Note - While calculating Average Cost per Unit decimal places are not rounded off)

Periodic Inventory System

Periodic Inventory system is a system of inventory in which inventories are updated on a periodic basis. Periodic basis may be monthly, quarterly, weekly, half yearly or yearly. In this system, inventories are not kept up to date.

Periodic FIFO Method - COGS and Ending Inventory

Under FIFO method, the oldest units are sold first.

Periodic - FIFO	Cost of Goods Available for sale	Cost of Goods Sold	Ending Inventory
# of Units	$ per unit	Cost of Goods Available for Sale	# of Units sold	Cost per Unit	Cost of Goods Sold	# of Units in ending inventory	Cost per Unit	Ending Inventory
Beginning Inventory. March 1	2670	$7	$18,690	2670	$7	$18,690	0	$7	$0
Purchases:
March.5	2040	$8	$16,320	2040	$8	$16,320	0	$8	$0
March.13	3820	$9	$34,380	3820	$9	$34,380	0	$9	$0
March.21	5150	$10	$51,500	3910	$10	$39,100	1240	$10	$12,400
March.26	1930	$11	$21,230	0		$0	1930	$11	$21,230
Total	15610		$142,120	12440		$108,490	3170		$33,630

Ending Inventory = $33,630

Cost of Goods Sold = $108,490

Ending Inventory and Cost of Goods sold using LIFO method

Under LIFO method, the newest units are sold first.

Periodic - LIFO	Cost of Goods Available for sale	Cost of Goods Sold	Ending Inventory
# of Units	$ per unit	Cost of Goods Available for Sale	# of Units sold	Cost per Unit	Cost of Goods Sold	# of Units in ending inventory	Cost per Unit	Ending Inventory
Beginning Inventory. March 1	2670	$7	$18,690	0	$7	$0	2670	$7	$18,690
Purchases:
March.5	2040	$8	$16,320	1540	$8	$12,320	500	$8	$4,000
March.13	3820	$9	$34,380	3820	$9	$34,380	0	$9	$0
March.21	5150	$10	$51,500	5150	$10	$51,500	0	$10	$0
March.26	1930	$11	$21,230	1930	$11	$21,230	0	$11	$0
Total	15610		$142,120	12440		$119,430	3170		$22,690

Ending Inventory = $22,690

Cost of Goods Sold = $119,430

Ending Inventory and COGS using Weighted Average Cost method

Weighted Average Cost Per Unit = Total Cost of material available for sale / Total quantity of material available for sale

Cost of Goods Available for Sale (Refer working of FIFO or LIFO) = $142,120

Total Units Available for Sale = 15,610 Units

Average Cost per unit = Total Cost of Goods Available for sale $142,120 / 15,610 Units

= $9.104420243

Ending Inventory = Ending Inventory Units 3,170 * Average Cost 9.104420243 = $28,861

Cost of goods sold = Sold Units 12,440 * Average Cost 9.104420243 = $113,259