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 January 1, 2014 (beginning inventory) Purchases: 758 $ 7 January 5, 2014 January 25, 2014 February 16, 2014 March 26, 2014 1,517 1,643 1,011 758 10 A physical inventory on March 31, 2014, shows 2,022 units on hand Prepare schedules to compute the ending inventory at March 31, 2014, under FIFO inventory methods. (Round answer to O decimal places, e.g. 2,760) Ending Inventory at March 31, 2014 Prepare schedules to compute the ending inventory at March 31, 2014, under LIFO inventory methods. (Round answer to 0 decimal places, e.g. 2,760.) Ending Inventory at March 31, 2014 s Calculate average-cost per unit. (Round answer to 2 decimal places, e.g. 2.76.) Weighted average-cost per unit Prepare schedules to compute the ending inventory at March 31, 2014, under Weighted-average inventory methods. (Round answer to 0 decimal places, e.g. 2,760.) Weighted-Avera Ending Inventory at March 31, 2014 s

Explanation / Answer

1.

Under FIFO inventory methods, goods purchased first are sold first. Hence, ending inventory shall represent the goods purchased last

Ending inventory at March 31, 2014 = (758 units * $11) + (1,011 units * $10) + (253 units * $9) = $20,725

2.

Under LIFO inventory method, goods purchased last are sold first. Hence, ending inventory represents are earliest purchased goods.

Ending inventory at March 31, 2014 = (758 units * $7) + (1,264 units * $8) = $15,418

3.

Units Purchased

Unit cost

Purchase price

Beginning inventory

            758

$7

$5,306

January 05, 2014

         1,517

$8

$12,136

January 25, 2014

         1,643

$9

$14,787

February 16, 2014

         1,011

$10

$10,110

March 26, 2014

            758

$11

$8,338

         5,687

$50,677

Average cost per unit = Total purchase price/Units purchased = $50,677/5,687 units = $8.91

4.

Ending inventory at March 31, 2014 = Ending inventory units * Average cost per unit = 2,022 units * $8.91 = $18,016

Units Purchased

Unit cost

Purchase price

Beginning inventory

            758

$7

$5,306

January 05, 2014

         1,517

$8

$12,136

January 25, 2014

         1,643

$9

$14,787

February 16, 2014

         1,011

$10

$10,110

March 26, 2014

            758

$11

$8,338

         5,687

$50,677

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