Exercise 6-7 Shamrock, Inc. reports the following for the month of June Date Exp

Question

Exercise 6-7 Shamrock, Inc. reports the following for the month of June Date Explanation Units Unit CostTotal CS une 1 12 23 30 115 371 205 231 575 2,226 1,435 Inventory Inventory Calculate weighted-average unit cost. (Round answer to 3 decimal places, e.g. 5.125.) Weighted-average unit cost Compute the cost of the ending inventory and the cost of goods sold under FIFO, LIFO, and average-cost. (Round answers to o decimal places, e.g. 125.) FIFO LIFO Average-cost The cost of the ending inventory The cost of goods sold Click if you would like to Show Work for this question: Open Show Work

Explanation / Answer

Quantity of opening Inventory and Purchases

= 115 + 371 + 205

= 691

Total cost of opening Inventory and Purchases

= $575 + $2,226 + $1,435

= $ 4,236

So, Weighted average cost

= Total cost of opening Inventory and Purchases / Quantity of opening Inventory and Purchases

= $4,236 / 691

= $6.130 per unit

Quantity sold

= Quantity of opening Inventory and Purchases – Quantity of closing Inventory

= 691 – 231

= 460 units

Under FIFO method, Inventory purchased first is issued first and the closing Inventory is valued from latest purchases

So, Value of closing Inventory of 231 units is as follows

= 205 units @ $7 + (231 – 205) x $6

= $ 1,591

So, Cost of goods sold under FIFO

= Total cost of opening Inventory and Purchases - Value of closing Inventory

= $ 4,236 - $ 1,591

= $2,645

Under LIFO method, Inventory purchased last is issued first and the closing Inventory is valued from oldest purchases

So, Value of closing Inventory of 231 units is as follows

= 115 units @ $5 + (231 – 115) x $6

= $ 1,271

So, Cost of goods sold under LIFO

= Total cost of opening Inventory and Purchases - Value of closing Inventory

= $ 4,236 - $ 1,271

= $2,965

Value of closing Inventory under Average cost

= Quantity x Average cost rate

= 231 x $6.130

= $1,416.03

Value of Cost of goods sold

= Units sold x Average cost rate

= 460 x $6.130

= $2,819.8

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