Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Methods
The units of an item available for sale during the year were as follows:
Jan. 1 | Inventory | 4 | units at $35 | $140 |
Aug. 7 | Purchase | 20 | units at $38 | 760 |
Dec. 11 | Purchase | 10 | units at $39 | 390 |
34 | units | $1,290 |
There are 18 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average cost method (round per unit cost to two decimal places and your final answer to the nearest whole dollar).
Inventory Cost:
FIFO | LIFO |
Weighted Avg. Cost |
|
Ending Inventory | $694 | $ 672 | $ 683 |
Explanation:
1) FIFO:
Dec.11 | 10 units | $ 39 | $390 |
Aug 7 | 8 units | $ 38 | $304 |
Total | 18 units | - | $694 |
2) LIFO:
Jan 1 | 4 units | $35 | $140 |
Aug 7 | 14 units | $38 | $532 |
Total | 18 units | - | $672 |
3) Weighted. Avg.:
weighted avg cost per unit:
= Total goods available for sale ÷ Total unit available
= $ 1290 ÷ 34 units
=$ 37.94 per unit
Ending Inventory:
= $37.94 × 18 units
= $683.
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