Question 1: FIFO and LIFO-Periodic and Perpetual) Inventory information for UMB
ID: 2570240 • Letter: Q
Question
Question 1: FIFO and LIFO-Periodic and Perpetual) Inventory information for UMB Corp. discloses the following information for the month of June. June 1 Balance 450 units S1 11 Purchased 1.200 units a S2 20 Purchased 750 units @ S3 June 10 Sold 300 units @ $2.40 15 Sold 750 units a S2.50 27 Sold 450 units S2.70 Instructions (a) Assuming that the periodic inventory method is used compute the cost of goods sold and ending inventory under (1) LIFO, (2) FIFO, and (3) weighted average method. (b) Assuming that the perpetual inventory method is used and costs are computed at the time of each withdrawal, compute the cost of goods sold and ending inventory under (1) LIFO and (2) FIFOExplanation / Answer
Answer a
(1) Computation of COGS & Ending Inventory under LIFO (periodic inventory method)
Total units of goods sold = 15,00 units
COGS = 750 units * $3 + 750 units * $2 = $3,750
Ending Inventory = 450 units * $1 + 450 units * $2 = $1,350
(2) Computation of COGS & Ending Inventory under FIFO (periodic inventory method)
Total units of goods sold = 15,00 units
COGS = 450 units * $1 + 1050 units * $2 = $2,550
Ending Inventory = 150 units * $2 + 750 units *3 = $2,550
(3) Computation of COGS & Ending Inventory under weighted Average method (periodic inventory method)
Average Cost per unit = $450 + $2,400 + $2,250 / 450 units + 1,200 units + 750 units = $2.125 per unit
COGS = 1500 units * $2.125 = $3,187.50
Ending Inventory = 900 units * $2.125 = $1,912.50
Answer (b)
1) Computation of COGS & Ending Inventory under LIFO (perpetual inventory method)
COGS = 300 units * $1 + 750 units * $2 + 450 units * $3 = $3,150
Ending Inventory = 150 units * $1 + 450 units * $2 + 300 units *$3 = $1,950
(2) Computation of COGS & Ending Inventory under FIFO (perpetual inventory method)
COGS = 450 units * $1 + 1050 units * $2 = $2,550
Ending Inventory = 150 units * $2 + 750 units *3 = $2,550
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