Discover how IDNLearn.com can help you learn and grow with its extensive Q&A platform. Our platform is designed to provide trustworthy and thorough answers to any questions you may have.
Sagot :
Certainly! Let's break down the problem step by step to determine the inventory cost using the different accounting methods:
### Inventory Details:
You were given the inventory details for the entire year as follows:
| Date | Type | Units | Cost per Unit |
|----------|-----------|-------|---------------|
| Jan. 1 | Inventory | 19 | \[tex]$40 | | Aug. 13 | Purchase | 17 | \$[/tex]43 |
| Nov. 30 | Purchase | 9 | \[tex]$44 | Total units available for sale: 19 + 17 + 9 = 45 units There are 27 units in the physical inventory at the end of the year (December 31). ### (a) First-in, first-out (FIFO) Method: FIFO assumes that the earliest purchased items are sold first. Therefore, the ending inventory consists of the most recently purchased items. Given ending inventory: 27 units 1. We use Nov. 30 units first: - Units: 9 - Cost per unit: \$[/tex]44
- Total: 9 * 44 = \[tex]$396 2. Next, we use the units from Aug. 13: - Units: 17 (as all 9 units from Nov. 30 are used up, we need 18 more units) - Cost per unit: \$[/tex]43
- Total: 17 * 43 = \[tex]$731 3. Finally, we use 1 unit from Jan. 1 to complete 27 units: - Units: 1 - Cost per unit: \$[/tex]40
- Total: 1 * 40 = \[tex]$40 Adding these together, the FIFO inventory cost is: - FIFO inventory cost = \$[/tex]396 + \[tex]$731 + \$[/tex]40 = \[tex]$1085 ### (b) Last-in, first-out (LIFO) Method: LIFO assumes that the most recently purchased items are sold first. Therefore, the ending inventory consists of the earliest purchased items. Given ending inventory: 27 units 1. We use Jan. 1 units first: - Units: 19 - Cost per unit: \$[/tex]40
- Total: 19 * 40 = \[tex]$760 2. Next, we use 8 units from Aug. 13 to complete 27 units: - Units: 8 (as all 19 units from Jan. 1 are used up, we need 8 more units) - Cost per unit: \$[/tex]43
- Total: 8 * 43 = \[tex]$344 Adding these together, the LIFO inventory cost is: - LIFO inventory cost = \$[/tex]760 + \[tex]$344 = \$[/tex]1194
### (c) Weighted Average Cost Method:
The weighted average cost per unit is calculated by dividing the total cost of goods available for sale by the total units available for sale.
1. Calculate the total cost of goods available for sale:
- Total cost = \[tex]$760 + \$[/tex]731 + \[tex]$396 = \$[/tex]1887
2. Calculate the weighted average cost per unit:
- Weighted average cost per unit = Total cost / Total units
- Weighted average cost per unit = \[tex]$1887 / 45 ≈ \$[/tex]41.93
3. Calculate the ending inventory cost:
- Ending inventory cost = Weighted average cost per unit Units in inventory
- Ending inventory cost ≈ \[tex]$41.93 27 = \$[/tex]1132.11
Rounding to the nearest whole dollar, the ending inventory cost under the weighted average cost method is:
- Weighted average inventory cost = \[tex]$1132 ### Summary: a. FIFO method: \$[/tex]1085
b. LIFO method: \[tex]$1194 c. Weighted average cost method: \$[/tex]1132
### Inventory Details:
You were given the inventory details for the entire year as follows:
| Date | Type | Units | Cost per Unit |
|----------|-----------|-------|---------------|
| Jan. 1 | Inventory | 19 | \[tex]$40 | | Aug. 13 | Purchase | 17 | \$[/tex]43 |
| Nov. 30 | Purchase | 9 | \[tex]$44 | Total units available for sale: 19 + 17 + 9 = 45 units There are 27 units in the physical inventory at the end of the year (December 31). ### (a) First-in, first-out (FIFO) Method: FIFO assumes that the earliest purchased items are sold first. Therefore, the ending inventory consists of the most recently purchased items. Given ending inventory: 27 units 1. We use Nov. 30 units first: - Units: 9 - Cost per unit: \$[/tex]44
- Total: 9 * 44 = \[tex]$396 2. Next, we use the units from Aug. 13: - Units: 17 (as all 9 units from Nov. 30 are used up, we need 18 more units) - Cost per unit: \$[/tex]43
- Total: 17 * 43 = \[tex]$731 3. Finally, we use 1 unit from Jan. 1 to complete 27 units: - Units: 1 - Cost per unit: \$[/tex]40
- Total: 1 * 40 = \[tex]$40 Adding these together, the FIFO inventory cost is: - FIFO inventory cost = \$[/tex]396 + \[tex]$731 + \$[/tex]40 = \[tex]$1085 ### (b) Last-in, first-out (LIFO) Method: LIFO assumes that the most recently purchased items are sold first. Therefore, the ending inventory consists of the earliest purchased items. Given ending inventory: 27 units 1. We use Jan. 1 units first: - Units: 19 - Cost per unit: \$[/tex]40
- Total: 19 * 40 = \[tex]$760 2. Next, we use 8 units from Aug. 13 to complete 27 units: - Units: 8 (as all 19 units from Jan. 1 are used up, we need 8 more units) - Cost per unit: \$[/tex]43
- Total: 8 * 43 = \[tex]$344 Adding these together, the LIFO inventory cost is: - LIFO inventory cost = \$[/tex]760 + \[tex]$344 = \$[/tex]1194
### (c) Weighted Average Cost Method:
The weighted average cost per unit is calculated by dividing the total cost of goods available for sale by the total units available for sale.
1. Calculate the total cost of goods available for sale:
- Total cost = \[tex]$760 + \$[/tex]731 + \[tex]$396 = \$[/tex]1887
2. Calculate the weighted average cost per unit:
- Weighted average cost per unit = Total cost / Total units
- Weighted average cost per unit = \[tex]$1887 / 45 ≈ \$[/tex]41.93
3. Calculate the ending inventory cost:
- Ending inventory cost = Weighted average cost per unit Units in inventory
- Ending inventory cost ≈ \[tex]$41.93 27 = \$[/tex]1132.11
Rounding to the nearest whole dollar, the ending inventory cost under the weighted average cost method is:
- Weighted average inventory cost = \[tex]$1132 ### Summary: a. FIFO method: \$[/tex]1085
b. LIFO method: \[tex]$1194 c. Weighted average cost method: \$[/tex]1132
We value your participation in this forum. Keep exploring, asking questions, and sharing your insights with the community. Together, we can find the best solutions. Thank you for trusting IDNLearn.com. We’re dedicated to providing accurate answers, so visit us again for more solutions.
