The following information is available for Quest Company: Mar. 1 Beginning inven
ID: 2504794 • Letter: T
Question
The following information is available for Quest Company:
Mar. 1
Beginning inventory
15 units @ $12.00 per unit
Mar. 9
Purchase
10 units @ $16.00 per unit
Mar. 14
Sale
6 units
Mar. 20
Purchase
6 units@ $18.00 per unit
Mar. 26
Sale
9 units
Required:
Answer the following questions for Quest Company:
a.
If FIFO is in use, what is the ending inventory in dollars?
b.
If periodic LIFO is in use, what is the cost of goods sold?
c.
If moving average is in use, what is the ending inventory in dollars (round calculations to the nearest cent)?
d.
If weighted average is in use, what is the ending inventory in dollars (round unit cost to the nearest tenth of a cent)?
Mar. 1
Beginning inventory
15 units @ $12.00 per unit
Mar. 9
Purchase
10 units @ $16.00 per unit
Mar. 14
Sale
6 units
Mar. 20
Purchase
6 units@ $18.00 per unit
Mar. 26
Sale
9 units
Explanation / Answer
FIFO:
Purchased Sold
15@12
10@16
------- -------- 6@12
6@18
--- ------------9@12
inventory left: 10@16+6@18
ending inventory in dollars:10*16+6*18 =268
LIFO:
Purchased Sold
15@12
10@16
--------------6@16
6@18
--------------6@18+3@16
inventory left: 15@12+1@16
ending inventory cost :15*12+1*16 =196
Moving Average:
We'll calculate new average each time a purchase is made
Purchased ----- Sold----------- New average
15@12
10@16 ------------------------------ (15*12+10*16)/25=13.6
-------------------6@13.6
6@18--------------------------------- (6*18+19*13.6)/25=14.656
------------------9@14.656
inventory left:16@14.656 =234.5
weighted average:
Purchased Sold
15@12
10@16
------------------6
6@18
------------------9
average: [15*12+10*16+6*18]/31=14.451
items left in inventory:16
ending inventory cost:16*14.451 =231.225
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