Shania Twain Company was formed on December 1, 2013. The following information i

Question

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

A physical inventory on March 31, 2014, shows 1,878 units on hand.

Prepare schedules to compute the ending inventory at March 31, 2014, under FIFO inventory methods.
Ending Inventory at Mar 31: (FIFO)

Prepare schedules to compute the ending inventory at March 31, 2014, under LIFO inventory methods.

Ending Inventory at Mar 31: (LIFO)

Calculate average-cost per unit

Weighted average-cost per unit:

Prepare schedules to compute the ending inventory at March 31, 2014, under Weighted-average inventory methods.

Ending Inventory at Mar 31: (Weighted-Average)

Units Unit cost Jan 1, 2014 (beg) 704 8 purchaes: Jan 5 1409 9 Jan 25 1526 10 Feb 16 939 11 Mar 704 12

Explanation / Answer

1. Ending Inventory as on March 31st 2014 as per FIFO:

Explanation to the above is the Units sold are Beginning Units + Purchases - Physical Units available. 704+1409+1526+939+704 - 1878 = 3404. So as we are in the FIFO 3404 units sold are taken from each Layer to the extent of the units availabe at them as FIrst in First Out.

2. Ending Inventory as on March 31st 2014 as per LIFO:

Explanation to the above is the Units sold are Beginning Units + Purchases - Physical Units available. 704+1409+1526+939+704 - 1878 = 3404. So as we are in the LIFO 3404 units sold are taken from each Layer to thh extent of the units availabe at them as Last in First Out.

3. Weighted average-cost per unit: Beginning + Purchases actual total cost / Number of Beginning and purchased Unints.

Hence = (704*8)+ (1409*9) + (1526*10) + (939*11) + (704*12) / 704+1409+1526+939+704 = 52,350/5282 = 9.91

4. Ending Inventory as on March 31st 2014 as per Weighted Average: In the given question the dates of units sold is not given so the Ending inventory Units would be the Physical Units available (1878) as on March 31 2014. The Inventory value would be 1878*9.91 = 18,610.98

Date Layer Beginning/Purchases Ending Inventory in Units Jan 1 2014 1 704 0 Jan 5 2014 2 1409 0 Jan 25 2014 3 1526 235 Feb 16 2014 4 939 939 March 2014 5 704 704 Total 1878

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