Question

Periodic Inventory by Three Methods

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

Jan. 1	Inventory	14 units at $46
Feb. 17	Purchase	6 units at $48
Jul. 21	Purchase	12 units at $50
Nov. 23	Purchase	4 units at $51

There are 14 units of the item in the physical inventory at December 31. The periodic inventory system is used. Round average unit cost to the nearest cent and final answers to the nearest whole dollar, if required.

a. Determine the inventory cost by the first-in, first-out method.
$

b. Determine the inventory cost by the last-in, first-out method.
$

c. Determine the inventory cost by the weighted average cost method.
$

Answer 1

Answer a: $704

Calculations:

Inventory cost by first-in, first-out method = [(4 x $51) + (10 x $50)]

= $204 + $500

= $704

.

Answer b:$644

Calculations:

Inventory cost by the last-in, fist-out method = 14 x $46 = $644

.

Answer c: $675.08

Calculations:

Inventory cost by the weighted average cost method = 14 x $48.22 = $675.08

Date		Units	Unit cost
Jan. 1	Beginning inventory	14	$ 46	$ 644
Feb. 17	Purchase	6	$ 48	$ 288
Jul. 21	Purchase	12	$ 50	$ 600
Nov. 23	Purchase	4	$ 51	$ 204
		36		$ 1,736

Weighted average unit cost = $1,736 ÷ 36 = $48.22

Inventory cost by the weighted average cost method = 14 x $48.22 = $675.08