Question

Saxton Company's inventory records for the most recent year contain the following data: (Click the icon to view the data.) Saxton Company sold a total of 18,500 units during the year. Read the requirements. Requirement 1. Using the average-cost method, compute the cost of goods sold and ending inventory for the year. (Round the average cost per unit to the nearest cent.) Using the average-cost method, the cost of goods sold is $ 20000 and the ending inventory is $ 11200 Requirement 2. Using the FIFO method, compute the cost of goods sold and ending inventory for the year. Using the FIFO method, the cost of goods sold is $ and the ending inventory is $L . Requirement 3. Using the LIFO method, compute the cost of goods sold and ending inventory for the year. Using the LIFO method, the cost of goods sold is $ and the ending inventory is $ © Data Table Beginning inventory Purchases during year Quantity 4,000 16,000 Unit Cost $ 8.00 $ 12.00 Enter any number Print Done

Answer 1

Ending inventory = opening + purchase - sold

= 4000 + 16000 - 18500 = 1500

1. Average method

Average cost per unit = (($8*4000)+($12*16000))/20000

= ($32000+192000)/20000

= $11.20 per unit

Cost of goods sold = 18500*$11.20 = $207200

Ending inventory = 1500*$11.20 = $16800

2. In FIFO Method those goods which were purchased first will be sold first. So sold inventory will include 4000 out of opening stock and 14500 of purchase. While ending inventory will include 1500 of purchase

Cost of goods sold = (4000*$8) + (14500*$12) = $206000

Ending inventory = 1500*$12) = $18000

3. In LIFO Method ending inventory will consist if opening stock.

Cost of goods sold = (16000*$12) + (2500*$8) = $212000

Ending inventory = (1500*$8) = 12000

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