Swan Building Supply started business at the beginning of the calendar year. Dur
ID: 2502314 • Letter: S
Question
Swan Building Supply started business at the beginning of the calendar year. During the year, it sold 690 Model K15 fans at an average price of $340 each. A physical count reveals that 218 units are still on hand. Swan Building Supply made the following purchases during the year.
Date of purchase Units Unit Price Total Cost
January 10 255 $195. $49725.
March 14 210 $198 $41580
May 17 305 $202 $61610
July 18 180 $205 $36900
Total 950 $189815
Determine the cost of ending inventory of Model K15 fans by three methods.
Ending Inventory Cost of Goods Sold
_______ 1.) Weighted average Cost _______ 1.) Weighted average Cost
_______ 2.) First-in, first-out _______ 2.) First-in, first-out
_______ 3.) Last-in, First-out _______ 3.) Last-in, First-out
Explanation / Answer
Determine the cost of ending inventory of Model K15 fans by three methods.
Ending Inventory Cost of Goods Sold
_______ 1.) Weighted average Cost _______ 1.) Weighted average Cost
Weighted average cost = total cost/total units = 189815/950 = 199.80526
Ending inventory = 218*199.80526 = 43557.55
Cost of goods sold = 189815 - 43557.55 = 146257.45
_______ 2.) First-in, first-out _______ 2.) First-in, first-out
The newest units are still in the ending inventory:
180 from July 18 purchase and 38 from May 17 purchase
Ending inventory = 180*205 + 38*202 = 44576
Cost of goods sold = 189815
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