Suggs Company sells coffee makers used in business offices. Its beginning invent
ID: 2425913 • Letter: S
Question
Suggs Company sells coffee makers used in business offices. Its beginning inventory of coffee makers was 160 units at $48 per unit. During the year, Suggs made two batch purchases of coffee makers. The first was a 320-unit purchase at $53 per unit; the second was a 375-unit purchase at $55 per unit. During the period, Suggs sold 800 coffee makers.
Determine the amount of product costs that would be allocated to cost of goods sold and ending inventory, assuming that Suggs uses
Weighted average
Suggs Company sells coffee makers used in business offices. Its beginning inventory of coffee makers was 160 units at $48 per unit. During the year, Suggs made two batch purchases of coffee makers. The first was a 320-unit purchase at $53 per unit; the second was a 375-unit purchase at $55 per unit. During the period, Suggs sold 800 coffee makers.
Explanation / Answer
a. FIFO:
Ending inventory : 55 units from the 2nd batch of purchase @ $ 55 = $ 3,025
Cost of goods sold : Cost of goods available for sale - ending inventory = 45, 265 - 3,025 = $ 42,240
b. LIFO:
Ending inventory: 55 units from beginning inventory @ $ 48 = $2,640
Cost of goods sold ; Cost of goods available for sale - ending inventory = 45,265 - 2,640 = $ 42,625
c. Weighted average:
Weighted average unit cost = Cost of goods available for sale / Number of units available for sale = 45,265 / 855
= $ 52.94
Therefore, ending inventory : 55 units @ $ 52.94 = $ 2,911.70
Cost of goods sold : Cost of goods available for sale - ending inventory = 45,265 - 2,911.70 = $ 42,353.30
Units Unit cost Total cosr Beginning inventory 160 $48 $ 7,680 1st batch of purchase 320 53 16,960 2nd batch of purchase 375 55 20,625 Available for sale 855 45,265 Sold 800 Ending inventory 55Related Questions
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