Question

Sage Company was formed on December 1,2016. The following information is available from Sage's inventory records for Product BAP Units Unit Cost January 1,2017 (beginning inventory) Purchases 744 $8.00 January 5, 2017 January 25,2017 February 16, 2017 March 26, 2017 1,488 1,612 992 744 9.00 10.00 11.00 12.00 A physical inventory on March 31, 2017, shows 1,984 units on hand Prepare schedule to compute the ending inventory at March 31,2017, under FIFO inventory method SAGE COMPANY COMPUTATION OF INVENTORY FOR PRODUCT BAP UNDER FIFO INVENTORY METHOD March 31,2017 Units Unit Cost Total Cost

Answer 1

Weighted Average Cost per Unit = Cost of Goods available for Sale / Units available for Sale

Cost of Goods available for Sale = Cost of Beginning Inventory + Cost of Purchase
Cost of Beginning Inventory = 744 * $8.00 = $5,952
Cost of Purchases = (1,488 * $9.00) + (1,612 * $10.00) + (992 * $11.00) + (744 * $12.00)
Cost of Purchases = $13,392 + $16,120 + $10,912 + $8,928
Cost of Purchases = $49,352

Cost of Goods available for Sale = $5,952 + $49,352
Cost of Goods available for Sale = $55,304

Units available for Sale = 744 + 1,488 + 1,612 + 992 + 744
Units available for Sale = 5,580 Units

Weighted Average Cost per Unit = 55,304 / 5,580
Weighted Average Cost per Unit = $9.91

Ending Inventory = 1,984 Units
Ending Inventory on March 31, 2017 = 1,984 * $9.91
Ending Inventory on March 31, 2017 = $19,661