Question

LO 5-6 Exercise 5-18 Allocating product cost between cost of goods sold and ending inventory: Multiple purchases Suggs Company sells coffee makers used in business offices. Its beginning inventory of coffee makers was 400 units at $50 per unit. During the year, Suggs made two batch purchases of coffee makers. The first was a 500-unit purchase at $55 per unit; the second was a 600-unit purchase at $58 per unit. During the period, Suggs sold 1,200 coffee makers. 196 Chapter 5 Required Determine the amount of product costs that would be allocated to cost of goods sold and ending inventory, assuming that Suggs uses a. FIFO. b. LIFO c. Weighted average.

Answer 1

1.

Beginning Inventory 1st Batch 2nd Batch FIFO Method Units Acquired Cost of Goods Sold Ending Balance Units Rate Amount Units Rate Amount Units Rate Amount 400 $50 $20,000 500 $55 $27,500 400 $50 $20,000 500 $55 $27,500 600 $58 $34,800 400 $50 $20,000 500 $55 $27,500 600 $58 $34,800 400 $50 $20,000 300 $58 $17,400 500 $55 $27,500 300 $58 $17,400 1100 $62,300 1200 $64,900 300 $17,400 Sold Total

2.

Beginning Inventory 1st Batch 2nd Batch LIFO Method Units Acquired Cost of Goods Sold Ending Balance Units Rate Amount Units Rate Amount Units Rate Amount 400 $50 $20,000 500 $55 $27,500 400 $50 $20,000 500 $55 $27,500 600 $58 $34,800 400 $50 $20,000 500 $55 $27,500 600 $58 $34,800 600 $58 $34,800 300 $50 $15,000 500 $55 $27,500 100 $50 $5,000 1100 $62,300 1200 $67,300 300 $15,000 Sold Total

Beginning Inventory 1st Batch 2nd Batch Sold Total Weighted Average Method Units Acquired Cost of Goods Sold Ending Balance Units Rate Amount Units Rate Amount Units Rate Amount 400 $50.00 $20,000 500 $55 $27,500 900 $52.78 $47,500 600 $58 $34,800 1500 $54.87 $82,300 1200 $54.87 $65,840 300 $54.87 $16,460 1100 $62,300 1200 $65,840 300 $16,460

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