Question

Cortez Company sells chairs that are used at computer stations. Its beginning inventory of chairs was 100 units at $ 60 per unit. During the year, Cortez made two batch purchases of this chair. The first was a 150 -unit purchase at $ 68 per unit; the second was a 200 -unit purchase at $ 72 per unit. During the period, it sold 270 chairs.

Required

Determine the amount of product costs that would be allocated to cost of goods sold and ending inventory, assuming that Cortez uses

Answer 1

Answer a. FIFO Units Unit Cost From beginning inventory From first purchase From second purchase Total 100 @ 150 @ 20 @ 270 $ $ $ 60.00 68.00 72.00 = = = Cost of Goods Sold $ 6,000 $ 10,200 $ 1,440 $ 17,640 FIFO Units Unit Cost Ending Inventory $ 12,960 From second purchase 180 @ $ 72.00 = Answer b. LIFO Units Unit Cost From second purchase From first purchase Total 200 @ 70 @ 270 $ $ 72.00 68.00 = = Cost of Goods Sold $ 14,400 $ 4,760 $ 19,160 LIFO Units From beginning inventory From first purchase Total ending inventory 100 @ 80 @ 1801 Unit Cost $ 60.00 = $ 68.00 = Ending Inventory $ 6,000 $ 5,440 $ 11,440 Answer c. Cost of goods sold Ending inventory 270 @ 180 @ $ $ 68.00 68.00 = = $ $ 18,360 12,240 Cost per unit = Cost of goods available for sale / Number of units available for sale Cost per unit = (100 * $60.00 +150 * $68.00 + 200 * $72.00)/(100 + 150 + 200) Cost per unit = $68.00