Date Transaction Units In Unit Cost Total Units Sold Selling Price Total (1) FIF

Question

Date

Transaction

Units In

Unit Cost

Total

Units Sold

Selling Price

Total

(1)
FIFO

(2)
LIFO

(3)
Weighted-Average

Presented below is information related to Blowfish radios for the Martinez Company for the month of July.

Date

Transaction

Units In

Unit Cost

Total

Units Sold

Selling Price

Total

July 1 Balance 140 $4.00 $  560 6 Purchase 1,120 4.10 4,592 7 Sale 420 $6.80 $ 2,856 10 Sale 420 7.10 2,982 12 Purchase 560 4.40 2,464 15 Sale 280 7.20 2,016 18 Purchase 420 4.50 1,890 22 Sale 560 7.20 4,032 25 Purchase 700 4.48 3,136 30 Sale 280 7.30 2,044    Totals 2,940 $12,642 1,960 $13,930

Explanation / Answer

Answer

1 ) weight average cost = total cost of goods available for sales / total unit avaiable for sale

= 12642 / 2940

= 4.3

2 ) ending inventory at july 31 = 2940 - 1960 = 980

FIFO = 700 * 4.48 + 280 * 4.50

= 4396

LIFO = 140 * 4 + 840 * 4.10

= 4004

WEIGHTED AVERAGE = 980 * 4.3

= 4214

3 ) LIFO will yield lowest gross profit

4 ) LIFO will yield the lowest ending inventory

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