Question

Units		Price per Unit					Total
Residential Pumps
	Inventory at Feb. 28:		400			$	300			$	120,000
Purchases:
	March 10		1,000			$	450			$	450,000
	March 20		800			$	475			$	380,000
	March 30		600			$	500			$	300,000
Sales:
	March 15		1,000			$	540			$	540,000
	March 25		800			$	570			$	456,000
	Inventory at March 31:		1,000
Commercial Pumps
	Inventory at Feb. 28:		1,200			$	800			$	960,000
Purchases:
	March 3		1,200			$	900			$	1,080,000
	March 12		600			$	950			$	570,000
	March 21		1,000			$	1,000			$	1,000,000
Sales:
	March 18		1,800			$	1,080			$	1,944,000
	March 29		1,200			$	1,140			$	1,368,000
	Inventory at March 31:		1,000

Assuming Bramble uses a periodic inventory system, determine the cost of inventory on hand at March 31 and the cost of goods sold for March under first-in, first-out (FIFO).

Cost of inventory		$
Cost of goods sold		$

eTextbook and Media

Assume Bramble uses dollar-value LIFO and one pool, consisting of the combination of residential and commercial pumps. Determine the cost of inventory on hand at March 31 and the cost of goods sold for March. Assume Bramble’s initial adoption of LIFO is on March 1. Use the double-extension method to determine the appropriate price indices. (Hint: The price index for February 28/March 1 should be 1.00.) (Round Price Index to 3 decimal places e.g. 1.522 and other answers to 0 decimal places, e.g. 5,275.)

Cost of inventory		$
Cost of goods sold		$
Price index

Answer 1

Answer-1:

If FIFO method is used, the units remaining in the inventory represent the most recent costs incurred to purchase the inventory.

The cost of 1,000 units of Residential pumps on 31 March would, therefore, be computed as follows:

Most recent cost: March 30: 600 units $500 per unit $ 300,000 Next most recent cost: March 20: 400 units $ $475 per unit $ 190,000 Total cost of 1,000 units in inventory on March 31 (i.e. ending inventory) $ 490,000

The cost of 1,000 units of Commercial pumps on 31 March would, therefore, be computed as follows:

Most recent cost: March 21: 1,000 units $1,000 per unit $ 1,000,000 Total cost of 1,000 units in inventory on March 31 (i.e. ending inventory) $ 1,000,000

Total cost of inventory on 31 March = $490,000 + $1,000,000 = $1,490,000

Tthe cost of goods sold would be computed as follows:

Cost of goods sold = Cost of units in beginning inventory + Cost of units purchased during the period – Cost of units in ending inventory

Residential Pumps: Cost of units on February 28 (beginning inventory): 400 units @ $300 per unit $ 120,000 $ Add cost of units purchased during the period: 1,000 units @ $450 per unit 800 units @ $475 per unit 600 units @ $500 per unit Total cost of units available for sale Less: Cost of units in ending inventory Total cost of 1,800 units sold during the period 450,000 380,000 300,000 1,130,000 1,250,000 490,000 760,000 $

Commercial Pumps: Cost of units on February 28 (beginning inventory): 1,200 units @ $800 per unit $ 960,000 Add cost of units purchased during the period: 1,200 units @ $900 per unit 600 units @ $950 per unit 1,000 units @ $1,000 per unit Total cost of units available for sale Less: Cost of units in ending inventory Total cost of 1,800 units sold during the period $ 1,080,000 570,000 1,000,000 2,650,000 3,610,000 1,000,000 $ 2,610,000

Total cost of goods sold = $760,000 + $2,610,000 = $3,370,000

Answer-2

Date Purchase Sales Price index Inventory at base date price Change from prior date Residential Commercial Residential Commercial Total $ 120,000$ 960,000 $1,080,000 $ 1,080,000 $1,080,000 $ 450,000 $ 450,000 $ 570,000 $ 570,000 $ $ $ $ $ Inventory at end date price Total - $ 1,080,000 - $ 2,160,000 - $ 2,610,000 - $ 3,180,000 490,000 $ 2,690,000 1,650,000 $ 1,040,000 - $ 1,420,000 - $ 2,420,000 370,000 $ 2,050,000 1,160,000 $ 890,000 - $ 1,190,000 490,000 Feb.28 March.03 March.10 March.12 March.15 March.18 March.20 March.21 March.25 March.29 March.30 $ $ $ $ 1,650,000 1.000 1.059 1.115 1.128 1.067 0.963 1.076 1.142 1.090 0.967 1.082 $ 1,080,000 2,039,660 $ 959,660 2,340,000 $ 300,340 2,820,000 $ 480,000 2,520,000 $ (300,000) 1,080,000 $ (1,440,000) 1,320,000 $ 240,000 2,120,000 $ 800,000 1,880,000 $ (240,000) 920,000 $ (960,000) 1,100,000 $ 180,000 380000 $ $ 380,000 $1,000,000 $ 1,000,000 370000 $ 1160000 $ $ $ $ $ 300000 $ 300,000

Feb.28 $1,080,000 @1.00 March.18 $1,080,000 @1.00 $ 1,080,000 $ 1,080,000 March.03 $1,080,000 @1.00 $959,660 @1.059 $ 1,080,000 $ 1,016,280 $ 2,096,280 March.20 $1,080,000 @1.00 $240,000 @1.076 $ 1,080,000 $ 258,240 $ 1,338,240 March.10 $1,080,000 @1.00 $959,660 @1.059 $300,340 @ 1.115 $ 1,080,000 $ 1,016,280 $ 334,879 $ 2,431,159 March.21 $1,080,000 @1.00 $240,000 @1.076 $800,000 @ 1.142 $ 1,080,000 $ 258,240 $ 913,600 $ 2,251,840 March.12 $1,080,000 @1.00 $959,660 @1.059 $300,340 @ 1.115 $480,000 @1.128 $ 1,080,000 $ 1,016,280 $ 334,879 $ 541,440 $ 2,972,599 March.25 $1,080,000 @1.00 $240,000 @1.076 $560,000 @1.142 $ 1,080,000 $ 258,240 $ 639,520 $ 1,977,760 March.29 $920,000 @1.00 $ 920,000 March.15 $1,080,000 @1.00 $959,660 @1.059 $300,340 @1.115 $180,000 @1.128 $ 1,080,000 $ 1,016,280 $ 334,879 $ 203,040 $ 2,634,199 March.30 $920,000 @1.00 $180,000 @1.082 $ 920,000 $ 194,760 $ 1,114,760