Question

Kingbird Company’s record of transactions concerning part X for the month of April was as follows.

Purchases							Sales
April 1	(balance on hand)		210	@	$5.20		April 5		410
4			510	@	5.30		12		310
11			410	@	5.51		27		1,020
18			310	@	5.56		28		150
26			710	@	5.82
30			310	@	6.03

Part 1

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Calculate average-cost per unit. Assume that perpetual inventory records are kept in units only. (Round answer to 2 decimal places, e.g. 2.76.)

Average-cost per unit

$

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Part 2

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Compute the inventory at April 30 on each of the following bases. Assume that perpetual inventory records are kept in units only. (1) First-in, first-out (FIFO). (2) Last-in, first-out (LIFO). (3) Average-cost. (Round final answers to 0 decimal places, e.g. $6,548.)

Answer 1

1. Calculation of average cost

Units	rate	purchase amount
210	$5.20	$1092
510	$5.30	$2703
410	$5.51	$2259.10
310	$5.56	$1723.60
710	$5.82	$4132.20
310	$6.03	$1869.30
	Total	$13779.20

Average cost per unit = $13779.20 / 2460 = $5.6 per unit

2. Total units = opening + purchase

= 2460 units

Units sold = 1890

Closing stock on April 30 = 2460 - 1890 = 570 units

FIFO Method - in this method units purchased first will be sold first , hence closing stock will consist recent purchases

= (310*$6.03) + (260*$5.82) = $3382.5

LIFO Method - In this method recently purchased goods will be sold first hence closing stock will contain opening stock and first purchase.

= (210*$5.20) + (360*$5.30)

= $3000

Average cost

= Closing stock * average cost

= 570 units * $5.6

= $3192