Date Transaction Units In Unit Cost Total Units Sold Selling Price Total LINK TO
ID: 2575017 • Letter: D
Question
Date
Transaction
Units In
Unit Cost
Total
Units Sold
Selling Price
Total
LINK TO TEXT
(1)
FIFO
(2)
LIFO
(3)
Weighted-Average
LINK TO TEXT
LINK TO TEXT
Presented below is information related to Blowfish radios for the Buffalo Company for the month of July.Date
Transaction
Units In
Unit Cost
Total
Units Sold
Selling Price
Total
July 1 Balance 190 $4.40 $ 836 6 Purchase 1,520 4.50 6,840 7 Sale 570 $6.70 $ 3,819 10 Sale 570 7.00 3,990 12 Purchase 760 4.80 3,648 15 Sale 380 7.10 2,698 18 Purchase 570 4.90 2,793 22 Sale 760 7.10 5,396 25 Purchase 950 4.88 4,636 30 Sale 380 7.20 2,736 Totals 3,990 $18,753 2,660 $18,639Explanation / Answer
Answer 1.
Number of units available for Sale = 3,990
Cost of Goods available for Sale = $18,753
Weighted-average Cost = Cost of Goods available for Sale / Number of units available for Sale
Weighted-average Cost = $18,753 / 3,990
Weighted-average Cost = $4.70
Answer 2.
FIFO:
Number of units available for Sale = 3,990
Cost of Goods available for Sale = $18,753
Number of units sold = 2,660
Units sold includes 190 units from beginning inventory, 1,520 from July 6 purchase, 760 from July 12 purchase and 190 from July 18 purchase.
Cost of Goods Sold = 190 * $4.40 + 1,520 * $4.50 + 760 * $4.80 + 190 * $4.90
Cost of Goods Sold = $12,255
Cost of Ending Inventory = Cost of Goods available for sale - Cost of Goods Sold
Cost of Ending Inventory = $18,753 - $12,255
Cost of Ending Inventory = $6,498
LIFO:
Number of units available for Sale = 3,990
Cost of Goods available for Sale = $18,753
Number of units sold = 2,660
Units sold includes 950 units from July 25 purchase, 570 from July 18 purchase, 760 from July 12 purchase and 380 from July 6 purchase
Cost of Goods Sold = 950 * $4.88 + 570 * $4.90 + 760 * $4.80 + 380 * $4.50
Cost of Goods Sold = $12,787
Cost of Ending Inventory = Cost of Goods available for sale - Cost of Goods Sold
Cost of Ending Inventory = $18,753 - $12,787
Cost of Ending Inventory = $5,966
Weighted-Average:
Number of units available for Sale = 3,990
Cost of Goods available for Sale = $18,753
Weighted-average Cost = Cost of Goods available for Sale / Number of units available for Sale
Weighted-average Cost = $18,753 / 3,990
Weighted-average Cost = $4.70
Number of units sold = 2,660
Cost of Goods Sold = Weighted-average Cost * Number of units sold
Cost of Goods Sold = $4.70 * 2,660
Cost of Goods Sold = $12,502
Cost of Ending Inventory = Cost of Goods available for sale - Cost of Goods Sold
Cost of Ending Inventory = $18,753 - $12,502
Cost of Ending Inventory = $6,251
Answer 3.
Inventory method with highest cost of goods sold will yield least gross profit.
So, from above analysis we can say that LIFO will yield least gross profit.
Answer 4.
From above analysis, we can say that LIFO will yield lowest ending inventory.
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