Question

Blue Corporation began operations on December 1, 2019. The only inventory transaction in 2019 was the purchase of inventory on December 10, 2019, at a cost of $25 per unit. None of this inventory was sold in 2019. Relevant information is as follows.

Ending inventory units
December 31, 2019				122
December 31, 2020, by purchase date
December 2, 2020		122
July 20, 2020		50		172

During the year 2020, the following purchases and sales were made.

Purchases						Sales
March 15		322 units	at	$30		April 10		222
July 20		322 units	at	32		August 20		322
September 4		222 units	at	35		November 18		172
December 2		122 units	at	38		December 12		222

The company uses the periodic inventory method.

Incorrect answer iconYour answer is incorrect.

Calculate average-cost per unit. (Round answer to 2 decimal places, e.e. 2.76.)

Average-cost

$

eTextbook and Media

Incorrect answer iconYour answer is incorrect.

Determine ending inventory under (1) specific identification, (2) FIFO, (3) LIFO, and (4) average-cost. (Round answers to 0 decimal places, e.g. 2,760.)

		Specific Identification		FIFO		LIFO		Average-Cost
Ending Inventory		$		$		$		$

eTextbook and Media

Incorrect answer iconYour answer is incorrect.

Calculate price index. (Round answer to 4 decimal places, e.g. 2.7653.)

Price Index

eTextbook and Media

Incorrect answer iconYour answer is incorrect.

Determine ending inventory using dollar-value LIFO. Assume that the December 2, 2017, purchase cost is the current cost of inventory. (Hint: The beginning inventory is the base layer priced at $25 per unit.) (Round answer to 0 decimal places, e.g. 2,760.)

Ending inventory at dollar-value LIFO

$

Answer 1

Average Cost Per Unit

Weighted Average Unit Cost	=	Total Cost of Inventory
		Total Units in Inventory
	Units	Unit Cost ($ per unit)	Total Cost
January 1, 2020 Beginning Inventory	122	25	3050
Purchases in 2020:
Mar-15	322	30	9660
Jul-20	322	32	10304
Sep-04	222	35	7770
Dec-02	122	38	4636
	1110	31.91	35420
(*) 35420/1110

Ending Inventory:

1. Specific Identification:

As per Specific Identification method, Ending Inventory is made up of 122 units from Dec 2, 2020 purchases and 50 units from July 20, 2020 purchases
Ending Inventory ($)	= (122 * 38) + (50 * 32)
	= 6236

2. FIFO

As per FIFO, units purchased first are sold first. Hence Ending inventory which is 172 units are left from 122 units @ $38/ unit purchased on Dec 02, 2020 and 50 units @ $35/ unit purchased on Sep 04, 2020
Ending Inventory ($)	= (122 * 38) + (50 * 35)
	= 6386

3. LIFO

As per LIFO, units purchased Last are sold first. Hence Ending inventory which is 172 units are left from 122 units @ $25/ unit purchased on Dec 10, 2019 and 50 units @ $30/ unit purchased on Mar 15, 2020
Ending Inventory ($)	= (122 * 25) + (50 * 30)
	= 4550

4. Average Cost

Units Available for sale (A)	= 122 + 322 + 322 + 222 + 122	1110
Units Sold (B)	= 222 + 322 + 172 + 222	938
Units in Ending Inventory (A- B)		172
Weighted Average Unit Cost ($)	=	35420
		1110
	=	32
Ending Inventory ($)	= 32 * 172
	= 5504