Question

Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Methods

The units of an item available for sale during the year were as follows:

Jan. 1	Inventory	6	units at $39	$234
July 7	Purchase	10	units at $41	410
Nov. 23	Purchase	15	units at $43	645
		31	units	$1,289

There are 12 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average cost method (round per unit cost to two decimal places and your final answer to the nearest whole dollar).

a.	First-in, first-out (FIFO)	$
b.	Last-in, first-out (LIFO)	$
c.	Weighted average cost	$

Answer 1

a.

As per FIFO method, ending inventory of 12 units will be valued as under:

Date	Units	Unit Cost	Total Cost
Nov-23	12	$43	$516

Cost of ending inventory = $516

b.

As per LIFO method , Ending inventory of 12 units will be valued as under:

Date	Units	Unit Cost	Total Cost
Jan-01	6	$39	$234
Jul-07	6	$41	$246
Total	12		$480

Cost of ending inventory = $480

c.

Weighted average cost per unit = Cost of goods available for sale/ Number of units available for sale

= 1,289/31

= $41.58

Cost of ending inventory = Ending inventory units x Weighted average cost per unit

= 12 x 41.58

= $499

a.	First-in, first-out (FIFO)	$516
b.	Last-in, first-out (LIFO)	$480
c.	Weighted average cost	$499