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Return to Blackboard Kimmel, Financial Accounting, 8e Help I System Announcements 08:21 PM / Remaining: 55 min. CALCULATOR PRINTER VERSION BACK NEXT Question 1 Sarasota Corp. uses a periodic inventory system. Its records show the following for the month of May, in which 71 units were sold. Date Explanation Units Unit Cost Total Cost May 1 15 24 Inventory Purchase Purchase Total 30 27 39 96 $9 $270 270 429 $969 10 dy Calculate the weighted-average unit cost. (Round answer to 3 decimal places, e.g. 5.125.) Weighted-average unit cost Calculate the ending inventory at May 31 using the FIFO, LIFO and average-cost methods. (Round answers to O decimal places, e.g. 125.) FIFO LIFO AVERAGE-COST The ending inventory at May 31 Question Attempts: O of 1 used SAVE FOR LATER SUBMIT ANSWER 7

Solution

1) Weighted Average unit cost = Total cost/Total units = $969/96 units = $10.094

Ending inventory (in units) at May 31 = Opening inventory+Units Purchased-Units sold

= 30 units + (27+39) units - 71 units = 96 units-71 units = 25 units

Under FIFO method, the inventory that is bought first is sold first. Therefore in case of FIFO method, the inventory should be from the last purchase of the month (i.e. 24 May). The unit cost of purchase on 24 May is $11 per unit.

Inventory under FIFO = Closing Inventory*Cost per unit = 25 units*$11 per unit = $275

Under LIFO method, the inventory that is bought last is sold first. Therefore in case of LIFO method, the inventory should be from the opening inventory of the month. The unit cost of opening inventory is $9 per unit.

Inventory under LIFO = Closing Inventory*Cost per unit = 25 units*$9 per unit = $225

Inventory under weighted avg. cost method = Closing Inventory*Weighted Avg. cost per unit (as calculated above)

= 25 units*$10.094 = $252.35 or $252 (rounded off)