Viper Company began year 2011 with 20,000 units of product in its January 1 inve
ID: 2357444 • Letter: V
Question
Viper Company began year 2011 with 20,000 units of product in its January 1 inventory costing $15 each. It made successive purchases of its product in year 2011 as follows. The company uses a periodic inventory system. On December 31, 2011, a physical count reveals that 35,000 units of its product remain in inventory.
Compute the amounts assigned to the 2011 ending inventory and the cost of goods sold.(Input all amounts as positive values. Round per unit costs to 3 decimal places. Round your finalanswers to the nearest dollar amount. Omit the "$" sign in your response.)
Viper Company began year 2011 with 20,000 units of product in its January 1 inventory costing $15 each. It made successive purchases of its product in year 2011 as follows. The company uses a periodic inventory system. On December 31, 2011, a physical count reveals that 35,000 units of its product remain in inventory.
Explanation / Answer
help: Jan 1 ...... 20,000 units @ $15; $300,000 Mar 7.......28,000 units @ $18; $504,000 May 20.....30,000 units @ $22; $660,000 Aug 1.......20,000 units @ $24; $480,000 Nov 10.....33,000 units @ $27; $891,000 Total 131,000 units for $2,835,000; weighted average cost $2,835,000/131,000 = $21.641 each 35,000 units remain in inventory on December 31, 2011, so 96,000 units were sold. 1. Compute the number and total cost of the units available for sale in year 2011 131,000 units at a total cost of $2,835,000 available for sale in year 2011 2. Compute the amounts assigned to the 2011 ending inventory and the cost of goods sold using (a) FIFO Under FIFO, the oldest units get sold off first, so those remaining on hand must have come from the latest (newest) units Ending inventory = (33,000 units @ $27) + (2,000 units @ $24) = $939,000 COGS = $2,835,000 - $939,000 = $1,896,000 (b) LIFO Under LIFO, the newest units get sold off first, so those remaining on hand must have come from the oldest units Ending inventory = (20,000 units @ $15) + (15,000 units @ $18) = $570,000 COGS = $2,835,000 - $570,000 = $2,265,000 (c) weighted average. Ending inventory = 35,000 units x $21.641 = $757,435 COGS = 96,000 units x $21.641 = $2,077,536 OR COGS = $2,835,000 - 757,435 = $2,077,565 (the slight difference is due to the rounding to 3 decimals)
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