The units of an item available for sale during the year were

The units of an item available for sale during the year were as follows:

There are 1,200 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost by (a) the first-in, first-out method; (b) the last-in, first-out method; and (c) the weighted average cost method.

Solution

Answer

inventory cost by F.I.F.O method

on nov 23 purchase the cost of inventory = 1200 * 140

= 168000

inventory cost by L.I.F.O method

the inventory cost = ( 1000 * 120 + 200 * 128 )

= 145600

inventory cost by weighted average cost method

weight average per unit = (1000*120+1375*128+1500*136+1125*140) / (1000+1375+1500+1125)

= 657500 / 5000

= 131.5

the inventory cost = 1200 * 131.5

= 157800