Question

Presented below is information related to Blowfish radios for the Splish Company for the month of July. Units Sold Selling Price Total Date Transaction Units In Unit Cost Nyt Balance 140 $250 6 Purchase 1120 4.50 Total $630 5.152 $7.00 520 10 S Purchase 560 740 2072 18 Purchase 22 Sale 25 Purchase 4144 2.940 5141120 $14322 Calculate average cost per unit. (Round answer to 2 decimal places, e-s. 2.76.) Weighted average costs Assuming that the periodic inventory method is used, compute the inventory cost at July 31 under each of the following cost flow assumptions. (Round answers to O decimal places, e s. 6,578.) (1) FIFO. (2) LIFO. (3) Weighted average. Ending oras Which of the methods used above will yield the lowest figure for gross profit for the income statement? method will yield the lowestros pro Which of the methods used above will yield the lowest figure for ending inventory for the balance sheet? method will yield the lowest ending inventory.

Answer 1

Requirement 1

Average cost per unit = $4.80

Requirement 2

	FIFO	LIFO	Weighted Average
Ending Inventory	$                   4,886	$             4,494	$              4,704
Cost of Goods Sold	$                   9,226	$             9,618	$              9,408

Requirement 3 and 4

Method that provide lowest GP = LIFO

Method that yeild lowest ending inventory = LIFO

Working

	Units	Cost per unit	value
Beginning Balance	140	$                     4.50	$ 630
Purchases
	1120	$                     4.60	$ 5,152
	560	$                     4.90	$ 2,744
	420	$                     5.00	$ 2,100
	700	$                     4.98	$ 3,486
Total	2940		$ 14,112

.

Average Cost of Inventory
Units	(A)	2940
Total Cost	(B)	$ 14,112
Average Cost	(C=B/A)	$                     4.80

.

FIFO
Total Units Available for sale		2940
Units Sold		1960
Closing Stock in Units		980
Valuation
Ending Inventory	700	@	$               4.98	$ 3,486
	280	@	$               5.00	$ 1,400
Value Of Ending Inventory				$              4,886
Cost of Goods sold				$              9,226
LIFO
Total Units Available for sale		2940
Units Sold		1960
Closing Stock in Units		980
Valuation
Ending Inventory	140	@	$               4.50	$ 630
	840	@	$               4.60	$ 3,864
Value Of Ending Inventory				$              4,494
Cost of Goods sold				$              9,618
Weighted Average method
Total Units Available for sale		2940
Units Sold		1960
Closing Stock in Units		980
Valuation
Ending Inventory	980	@	$               4.80	$              4,704
Value Of Ending Inventory				$              4,704
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)			$              9,408