Samuelson and Messenger (S&M) began 2013 with 200 units of its one product. Thes

Question

Samuelson and Messenger (S&M) began 2013 with 200 units of its one product. These units were purchased near the end of 2012 for $20 each. During the month of January, 100 units were purchased on January 8 for $23 each and another 200 units were purchased on January 19 for $25 each. Sales of 185 units and 190 units were made on January 10 and January 25, respectively. There were 125 units on hand at the end of the month. S&M uses a periodic inventory system. Calculate ending inventory and cost of goods sold for January using (1) FIFO, and (2) average cost.

Explanation / Answer

Under FIFO units acquired first are sold first so, units are sold from beginning inventory and so on.

Total unit sold = 185 +190 = 375

Average cost method:

Average cost per unit = (200*20 ) +(100* 23)+(200*25) / (200+100+200)

                                = [4000 +2300 5000 ] / 500

                                = 11300/500

                               = $ 22.60 per unit

COGS =375*22.60 =$ 8475

Ending Inventory = 125 * 22.60 = $ 2825

cost of goods sold Ending inventory units cost Total units cost Total Beginning 200 20 4000 jan 8 100 23 2300 jan 19 (375-200-100)=75 25 1875 (200-75)= 125 25 3125 Total cost of goods sold 8175 Total ending inventory 3125

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.