Exercise 8-15 (Part Level Submission) Units Unit Cost (a) FIFO SHOW SOLUTION SHO

Question

Exercise 8-15 (Part Level Submission)

Units

Unit Cost

(a)

FIFO

SHOW SOLUTION

SHOW ANSWER

LINK TO TEXT

(b)

LIFO

Exercise 8-15 (Part Level Submission)

Shania Twain Company was formed on December 1, 2013. The following information is available from Twain’s inventory records for Product BAP.

Units

Unit Cost

January 1, 2014 (beginning inventory) 850 $ 8 Purchases:    January 5, 2014 1,699 9    January 25, 2014 1,841 10    February 16, 2014 1,133 11    March 26, 2014 850 12
A physical inventory on March 31, 2014, shows 2,266 units on hand.

Explanation / Answer

1)

Under FIFO the units purchased first are sold first. The ending inventory comprises of the units purchased on Mar 26 , Feb, 26 and Jan, 25

Ending Inventory = Cost of 850 units @ $12 per unit + Cost of 1133 units @ $11 per unit + Cost of (2266-850-1133) units @ $ 10 per unit = $10200 + $12463 + $ 2830 = $25493

2)

Under LIFO the last units purchased are sold first. Hence the ending inventory will comprise of the purchases from the beginning inventory and Jan 5 purchases.

Ending inventory = Cost of beginning inventory of 850 units @ $8 per unit + Cost of (2266-850) units @ $ 9 per unit

= $6800 + $12744 = $19544

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