Question

Exercise 8-11

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

Purchases

Sales

April 1 (balance on hand) 1,500 @ $6.00 April 3 1,250 @ $10.00
4 3,750 @ 6.08 9 3,500 @ 10.00
8 2,000 @ 6.40 11 1,500 @ 11.00
13 3,000 @ 6.50 23 3,000 @ 11.00
21 1,750 @ 6.60 27 2,250 @ 12.00
29 1,250 @ 6.79 11,500
13,250

Assuming that periodic inventory records are kept in units only,, calculate the average-cost per unit. (Round answer to 2 dec

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Answer #1
1. Average Cost per Unit = $6.70 per unit
2. Inventory at April 30
LIFO $10,520.00 =1500 * $6.00 + (250 * $6.08 )
Average-cost $11,725.18 =1750 * $6.70
3. Ending Inventory using FIFO & LIFO
FIFO Units Rate Value
Inventory from April 29 1250 $6.79 $8,487.50
Inventory from April 21 500 $6.60 $3,300.00
Total $11,787.50
LIFO Units Rate Value
Beginning Inventory 1500 $6.00 $9,000.00
Inventory from April 4 250 $6.08 $1,520.00
Total $10,520.00
4. Cost of Goods Sold $72,350 (See Working in Table)
5. In inflanatory period, FIFO method will show the highest Income. As Cost of Goods Sold is less in FIFO method as compared to LIFO & Average method
Working Average Cost
Date Purchase Cost of Goods Sold Inventory on Hand
Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost
Apr.1 1500 $6.00 $9,000
Apr.3 1250 $6.00 $7,500 250 $6.00 $1,500
Apr.4 3750 $6.08 $22,800 4000 $6.08 $24,300 ($1500 + $22800)/4000
Apr.8 2000 $6.40 $12,800 6000 $6.18 $37,100 ($24300 + $12800)/6000
Apr.9 3500 $6.18 $21,642 2500 $6.18 $15,458
Apr.11 1500 $6.18 $9,275 1000 $6.18 $6,183
Apr.13 3000 $6.50 $19,500 4000 $6.42 $25,683 ($6183 + $19500)/4000
Apr.21 1750 $6.60 $11,550 5750 $6.48 $37,233 ($25683 + $11550)/5750
Apr.23 3000 $6.48 $19,426 2750 $6.48 $17,807
Apr.27 2250 $6.48 $14,570 500 $6.48 $3,238
Apr.29 1250 $6.79 $8,488 1750 $6.70 $11,725 ($3238 + $8488)/1750
Totals 11750 $75,138 11500 $72,412 1750 $11,725
Date Purchase Cost of Goods Sold Inventory on Hand
Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost Quantity Unit Cost Total Cost
Apr.1 1500 $6.00 $9,000
Apr.3 1250 $6.00 $7,500 250 $6.00 $1,500
Apr.4 3750 $6.08 $22,800 250 $6.00 $1,500
3750 $6.08 $22,800
Apr.8 2000 $6.40 $12,800 250 $6.00 $1,500
3750 $6.08 $22,800
2000 $6.40 $12,800
Apr.9 250 $6.00 $1,500 0 $6.00 $0
3250 $6.08 $19,760 500 $6.08 $3,040
2000 $6.40 $12,800
Apr.11 500 $6.08 $3,040 0 $6.08
1000 $6.40 $6,400 1000 $6.40 $6,400
Apr.13 3000 $6.50 $19,500 1000 $6.40 $6,400
3000 $6.50 $19,500
Apr.21 1750 $6.60 $11,550 1000 $6.40 $6,400
3000 $6.50 $19,500
1750 $6.60 $11,550
Apr.23 1000 $6.40 $6,400 0 $6.40 $0
2000 $6.50 $13,000 1000 $6.50 $6,500
1750 $6.60 $11,550
Apr.27 1000 $6.50 $6,500 0 $6.50 $0
1250 $6.60 $8,250 500 $6.60 $3,300
Apr.29 1250 $6.79 $8,488 500 $6.60 $3,300
1250 $6.79 $8,488
Totals 11750 $75,138 11500 $72,350 1750 $11,788
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