Question

Problem 6-02A a, b1-b2, с (Video) Express Distribution markets CDs of the performing artist Fishe. At the beginning of October, Express had in beginning inventory 2,000 of Fishe's CDs with a unit cost of $7. During October, Express made the following purchases of Fishe's CDs. Oct. 3 2,500 @ $8 Oct. 9 3,500 @ $9 Oct. 19 3,000 @ $10 Oct. 25 4,000 @ $11 During October, 10,900 units were sold. Express uses a periodic inventory system. Determine the cost of goods available for sale. Cost of goods available for sale LINK TO TEXT VIDEO: SIMILAR PROBLEM Calculate weighted average cost per unit. (Round answer to 2 decimal places, e.g. 2.25.) Weighted average cost per units LINK TO TEXT VIDEO: STHILAR PROBLEM

Answer 1

Compute Cost goods available for sale as follows:

	Unit	Rate	Amount
Beginning inventory	2,000	$7	$14,000
Add: October 03	2,500	$8	$20,000
Add: October 09	3,500	$9	$31,500
Add: October 19	3,000	$10	$30,000
Add: October 25	4,000	$11	$44,000
Total	15,000		$139,500

Calculate Weighted Average cost per unit as follows:

Cost per unit = Total Cost/Total number of units

= $139,500/15,000

= $9.30

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Compute Ending inventory for the month of October as follows:

Ending Inventory = Units available for sale - Units sold

= 15,000 - 10,900

= 4,100 units.

Compute cost of ending invenory and cost of Goods sold under:

1) FIFO method:

Cost of Ending inventory = (4,000 units $\times$ $11) + (100 units $\times$ $10)

= $45,000

COGS = Cost of goods available for sale - Ending inventory cost

= $139,500 - $45,000

= $94,500

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2) LIFO method:

Cost of Ending inventory = (2,100 units $\times$ $8) + (2,000 units $\times$ ​​​​​​​ $7)

= $30,800

COGS = Cost of goods available for sale - Ending inventory cost

= $139,500 - $30,800

= $108,700

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3) Average Cost:

Cost of Ending inventory = Ending inventory units  $\times$ Cost per unit

= 4,100 units $\times$ $9.30

= $38,130

COGS = Cost of goods available for sale - Ending inventory cost

= $139,500 - $38,130

= $101,370

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(1) FIFO method: $45,000

(2) LIFO method: $108,700