2 pts 200 units for 35 each on 50 each from March 1 through

2 pts 200 units for $35 each on 50 each from March 1 through December 31.If the inventory costing method, calculate the cost of ending 31. (Assume that the company uses a o $20 each on uruary 31 It purchased 200 units for S

Solution

22

Jan 31 purchases are 500 units at 40 equals $20,000

Feb purchases are 200 units at 35 equals $7,000

Total purchases are @27,000 for 700 units, average cost is 27,000/7,000 = 38.57143

Ending inventory is goods available for sale (700) less sales (200) 500 units.

Cost of ending inventory = units in inventory * cost per unit = 500 * 38.57143= 19,285

21

under LIFO method last purchased inventory is expensed to cost of goods sold first.

of the 225 units sold, 165 are from last purchase in Feb and the balance 40 from the purchase in Jan.

Purhcase in Feb is at 50 per unit and in Jan at 40 per unit, thus, total cost of goods sold = 165*50 + 40*40 = $10,650