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a company's inventory records contain the following informtation: Beginning Inventory: 300 Units , $780 Purchased on...

a company's inventory records contain the following informtation:

Beginning Inventory: 300 Units , $780

Purchased on June 10: 400 units 1,170

Purchased on June 25: 500 Units , 1260

Purchases on June 28: 300 Units, 990

Total: 1,500 units, $4200

The company sold 1,000 units during june and 500 units were in its ending inventory on June 30.

1) If the company uses LIFO method, what is the cost of its ending inventory:

a. $1,365

b. $1,494

c. $1,620

d. $2,835

2) if the company uses the weighted average inventory costing method, what is the cost of its ending inventory?

a. $4,200

b. $2,700

c. $1,400

d. $1,365

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Answer #1

1) Answer-a. S1,365 working notes: No of Units Produced 1500 No of Units sold 1,000 Ending Inventory-500 Cost of Ending Inventory LIFO Beginning invenrory(S300 S2.6) S780 purcahsed june.10 ($200 $2.925) S585 S 1,365 S1,365 Beginning Inventory Unit price $780/300 S2.6 Purchased units june .10 Unit Price 1,170/400 $2.925 2) Answer-c. S1,400 working notes: Average Cost No of Units Produced 1,500 Cost of Goods available for sale S4,200 No of Units sold-1,000 Ending inventory = 500 Average Cost per unit- Cost of Goods availble for sale /no of Units produced - S4,200/1,500 $2.8 Ending inventory 500*S2.8-S1,400

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