Question

Sandhill Co. uses a perpetual inventory system. Data for product E2-D2 includes the following purchases. Date Number of Units Unit Price May 7 48 $14 July 28 36 19 On June 1, Sandhill sold 24 units, and on August 27, 36 more units. X Your answer is incorrect. Calculate the average cost of the goods sold in the sale. (Round answers to 3 decimal places, e.g. 5.125.) June 1 sale: $ 336 Aug. 27 sale: $ 23.720

Answer 1

Solution 1:

Computation of ending inventory COGS under Weighted Average Cost
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
7-May	0	$0.00	$0.00	48	$14.00	$672.00	0	$0.00	$0.00	48	$14.00	$672.00
1-Jun	48	$14.00	$672.00	0	$0.00	$0.00	24	$14.00	$336.00	24	$14.00	$336.00
28-Jul	24	$14.00	$336	36	$19.00	$684	0	$0.00	$0	60	$17.00	$1,020
27-Aug	60	$17.00	$1,020	0	$0.00	$0	36	$17.00	$612	24	$17.00	$408
Total							60		$948	24		$408

Average cost of goods sold - Jun 1 = $14 per unit, 27 Aug - $17 per unit

Solution 2:

Computation of ending inventory COGS under FIFO
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
7-May	0	$0.00	$0.00	48	$14.00	$672.00	0	$0.00	$0.00	48	$14.00	$672.00
1-Jun	48	$14.00	$672.00	0	$0.00	$0.00	24	$14.00	$336.00	24	$14.00	$336.00
28-Jul	24	$14.00	$336.00	36	$19.00	$684.00	0	$0.00	$0.00	24	$14.00	$336.00
										36	$19.00	$684.00
27-Aug	24	$14.00	$336.00	0	$0.00	$0.00	24	$14.00	$336.00	24	$19.00	$456.00
	36	$19.00	$684.00				12	$19.00	$228.00
Total							60		$900.00	24		$456.00

Computation of ending inventory COGS under LIFO
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
7-May	0	$0.00	$0.00	48	$14.00	$672.00	0	$0.00	$0.00	48	$14.00	$672.00
1-Jun	48	$14.00	$672.00	0	$0.00	$0.00	24	$14.00	$336.00	24	$14.00	$336.00
28-Jul	24	$14.00	$336.00	36	$19.00	$684.00	0	$0.00	$0.00	24	$14.00	$336.00
										36	$19.00	$684.00
27-Aug	24	$14.00	$336.00	0	$0.00	$0.00	36	$19.00	$684.00	24	$14.00	$336.00
	36	$19.00	$684.00						$0.00
Total							60		$1,020.00	24		$336.00

Computation of ending inventory COGS under Weighted Average Cost
Date	Beginning Inventory			Purchase			Cost of Goods Sold			Ending Inventory
	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount	Qty	Rate	Amount
7-May	0	$0.00	$0.00	48	$14.00	$672.00	0	$0.00	$0.00	48	$14.00	$672.00
1-Jun	48	$14.00	$672.00	0	$0.00	$0.00	24	$14.00	$336.00	24	$14.00	$336.00
28-Jul	24	$14.00	$336	36	$19.00	$684	0	$0.00	$0	60	$17.00	$1,020
27-Aug	60	$17.00	$1,020	0	$0.00	$0	36	$17.00	$612	24	$17.00	$408
Total							60		$948	24		$408