Question

Exercise 8.7 Costing Inventory in a Periodic System (LO 8-4)

Rogers Products uses a periodic inventory system. The company’s records show the beginning inventory of PH4 oil filters on January 1 and the purchases of this item during the current year to be as follows.

Jan. 1	Beginning inventory		14	units	@	$	3.00		$	42.00
Feb. 23	Purchase		16	units	@	$	3.50			56.00
Apr. 20	Purchase		34	units	@	$	3.80			129.20
May 4	Purchase		39	units	@	$	4.00			156.00
Nov. 30	Purchase		19	units	@	$	5.00			95.00
	Totals		122	units					$	478.20

A physical count indicates 25 units in inventory at year-end.

Determine the cost of the ending inventory on the basis of each of the following methods of inventory valuation. (Remember to use periodic inventory costing procedures.) (Round your intermediate and final answers to 2 decimal places.)

a) AVG Cost

b) FIFO

c) LIFO

Answer 1

Solution

Weighted Average	$      98.00
FIFO	$   119.00
LIFO	$      80.50

Working

	Units	Cost per unit	value
Beginning Balance	14	$                     3.00	$ 42
Purchases
	16	$                     3.50	$ 56
	34	$                     3.80	$ 129
	39	$                     4.00	$ 156
	19	$                     5.00	$ 95
Total	122		$ 478

.

Average Cost of Inventory
Units	(A)	122
Total Cost	(B)	$ 478
Average Cost	(C=B/A)	$                     3.92

.

FIFO
Total Units Available for sale		122
Units Sold		97
Closing Stock in Units		25
Valuation
Ending Inventory	19	@	$               5.00	$ 95
	6	@	$               4.00	$ 24
Value Of Ending Inventory				$                  119
Cost of Goods sold				$                  359
LIFO
Total Units Available for sale		122
Units Sold		97
Closing Stock in Units		25
Valuation
Ending Inventory	14	@	$               3.00	$ 42
	11	@	$               3.50	$ 39
Value Of Ending Inventory				$                    81
Cost of Goods sold				$                  398
Weighted Average method
Total Units Available for sale		122
Units Sold		97
Closing Stock in Units		25
Valuation
Ending Inventory	25	@	$               3.92	$                    98
Value Of Ending Inventory				$                    98
Cost of Goods sold	(Total Purchase and opening stock Minus Closing Stock)			$                  380