Question

Problem 17.1A Computing inventory costs under different valuation methods. LO 17-1 The following data concerns inventory and purchases at Muse Company. bok 95 units at $108 int Inventory, January 1 Purchases: January 6 January 15 January 22 Inventory, January 31 ences 65 units at $107 50 units at $107 40 units at $101 93 units a. Determine the cost of the ending inventory on January 31 under the average cost method. b. Determine the cost of the ending inventory on January 31 under the first in, first out (FIFO) method. c. Determine the cost of the ending Inventory on January 31 under the last in, first out (LIFO) method. Analyze: Which inventory valuation method resulted in the highest dollar amount for ending Inventory? Complete this question by entering your answers in the tabs below. Average Cost FIFO LIFO Analyze Determine the cost of the ending Inventory on January 31 under the first in, first out (FIFO) method.

Answer 1

a) Average Cost Method:
Average cost per unit [($108 + $107 + $107 + $101)/2] (a)	$105.75
Ending inventory in units (b)	93
Cost of Ending inventory under average cost (a*b)	$9,835
b) FIFO:
Cost of Ending Inventory under FIFO:
January 22 (40 units * $101)	$4,040
January 15 (50 units * $107)	$5,350
January 6 (93 - 40 - 50 = 3 units * $107)	$321
Cost of Ending Inventory under FIFO	$9,711
c) LIFO:
Cost of Ending Inventory under LIFO:
January 1 (93 units * $108)	$10,044
Cost of Ending Inventory under LIFO	$10,044
LIFO Inventory method results highest cost dollar amount for ending inventory because its cost of $10,044 is higher compare with other two methods.