Question

Cortez Company sells chairs that are used at computer stations. Its beginning inventory of chairs was 120 units at $110 per unit. During the year, Cortez made two batch purchases of this chair. The first was a 226-unit purchase at $125 per unit; the second was a 264-unit purchase at $132 per unit. During the period, it sold 372 chairs. Required Determine the amount of product costs that would be allocated to cost of goods sold and ending inventory, assuming that Cortez uses a. FIFO Cost of Goods Sold FIFO Units Unit Cost Cost of Goods Sold From beginning inventory From first purchase From second purchase Total Ending Inventory FIFO Units Unit Cost Ending Inventory

Answer 1

a.

Cost of goods sold: FIFO From Beg. Inventory From first purchase From second purchase Units 120 @ 226 @ 26 @ Unit cost $ 1100= $125 = $ 132 = Cost of goods sold $ 13,200 $ 28,250 $3,432 $ 44,882 Total 372 Ending inventory: FIFO From second purchase Units 238 @ Unit cost Cost of goods sold $132 = | $ 31,416

b.

Unit cost Cost of goods sold: LIFO From first purchase From second purchase $ 125 = 1 Units 108 @ 264 @ 372 Cost of goods sold $ 13,500 $ 34,848 $ 48,348 $ 132= Total Ending inventory: LIFO From Beg. Inventory From first purchase Total Units 120 @ 118 @ 238 Unit cost $ 110 = $ 125 = Cost of goods sold $ 13,200 $ 14,750 $ 27,950

c.

From Beg. Inventory From first purchase From second purchase Total 120 @ 226 @ 264 @ $ 125 $132 = $ 13,200 $ 28,250 $ 34,848 $ 76,298 610) Avg. cost = $76,298/610 = $125 Cost of goods sold Ending inventory 372 @ 238 @ $125 = $125 = $46,500 $ 29,750