The following units are available for sale during the year J

The following units are available for sale during the year:

January 1 Beginning Inventory 10 units at $18 each

April 3 Purchase 30 units at $20 each

August 31 Purchase 28 units at $25 each

September 29 Purchase 17 units at $30 each

December 31 Ending Inventory 21 units

Determine ending inventory cost by (a) FIFO method, (b) LIFO method, and (c) average cost method.

Solution

A) calculation of ending inventory under FIFO METHOD :

   ending inventory of 21 units under FIFO METHOD

ending inventory = 17 units @30 each + 4 units @ 25 each

                              = 510 + 100

                              = $ 610

B) calculation of ending inventory under LIFO METHOD :

   ending inventory of 21 units LIFO METHOD

ending inventory = 10 units @ 18 + 11 units @ 20

                               = 180 + 220

                               = $ 400

C) calculation of ending inventory under AVERAGE COST METHOD :

average cost

AVERAGE COST = TOTAL COST / TOTAL UNITS

                           = 1990 / 85

                            = 23.41

ENDING INVENTORY = 21 UNITS @23.42

                                     =$ 492