assume the following data for Burnette Company for 20X5: Beginning inventory 10
ID: 2450050 • Letter: A
Question
assume the following data for Burnette Company for 20X5: Beginning inventory 10 units at $7 each. March 18 purchase 15 units at $9 each June 10 purchase 20 units at $10 each October 30 purchase 12 units at $11 each. On December 31 a physical count reveals 15 units in ending inventory: Under the LIFO method ending inventory would be valued at? Under the FIFO method cost of goods sold on the income statement would be? Under the weighted-average method cost of goods sold on the income statement would be?
Explanation / Answer
Units available for sale = 10 + 15 + 20 + 12 = 57 units
Units at ending Inventory = 15
Units sold = 57 -15 = 42 units
A)Under LIFO method units acquired /purchased last are sold first .so ending Inventory are from Initial purchase.
Ending Inventory = (10 * 7 ) +(5 *9)
= 70 + 45
= $ 115
B) under FIFO ,units purchase first are sold first.
COGS= (10*7)+(15 *9) +[(42 -10 -15) * 10]
= 70 + 135 + [17 * 10]
= 70 +135 + 170
= $ 375
C) Average cost = Total cost of invenotry available for sale / units available for sale
=(10*7 )+(15*9) +(20 *10)+(12*11) ] / 57
= [70 + 135+ 200+ 132 ]/ 57
= 537 / 57
= $ 9.42 per unit
COGS =units sold *weighted average cost
= 42 * 9.42
= $ 395.64
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.