Question

The units of Manganese Plus available for sale during the year were as follows:

Mar. 1	Inventory	25 units	@ $30	$750
June 16	Purchase	32 units	@ $31	992
Nov. 28	Purchase	46 units	@ $37	1,702
		103 units		$3,444

There are 15 units of the product in the physical inventory at November 30. The periodic inventory system is used. Round answers to the nearest whole dollar.

a. Determine the inventory cost by the FIFO method.
$

b. Determine the inventory cost by the LIFO method.
$

c. Determine the inventory cost by the average cost methods.
$

Answer 1

a. Under FIFO method of inventory valuation, ending inventory consists of the units from recent purchases.

Ending inventory of 15 units consists of Nov. 28 purchases.

Ending inventory = 15 units * $37 per unit

= $555

b. Under LIFO methos of inventory valaution, ending inventory consists of units from beginning inventory and earliest purchases.

Ending inventory of 15 units consists of beginning inventory.

Ending inventory = 15 units * $30 per unit

= $450

c. Average cost per unit = Cost of units available for sale / Number of units available for sale

= $3,444 / 103

= $33.44

Ending inventory = 15 units * $33.44 (rounded to 2 decimal places)

= $502 (rounded to 0 decimal places)