Question

Oahu Kiki tracks the number of units purchased and sold throughout each accounting period but applies its inventory costing method at the end of each month, as if it uses a periodic inventory system. Assume Oahu Kiki’s records show the following for the month of January. Sales totaled 280 units.

	Date	Units			Unit Cost			Total Cost
Beginning Inventory	January 1		220		$	90		$	19,800
Purchase	January 15		480			100			48,000
Purchase	January 24		200			120			24,000

Required:

1. Calculate the number and cost of goods available for sale.
2. Calculate the number of units in ending inventory.
3. Calculate the cost of ending inventory and cost of goods sold using the (a) FIFO, (b) LIFO, and (c) weighted average cost methods.

Answer 1

1. Cost of goods available for sale = $19800 + 48000 + 24000 = $91,800

No. of units available for sale = 220+480+200 = 900 units

2. Number of units in ending inventory = 900 - 280 = 620 units

3.  (a) Cost of ending inventory = 24000+(620-200)*100 = $66000

cost of goods sold = 91800 - 66000 = $25,800

(b) Cost of ending inventory = 19800+(620-220)*100 = $59,800

cost of goods sold = 91800 - 59,800 = $32,000

(c) weighted average per unit = 91800/900 = $102 per unit

Cost of ending inventory = 620*102 = $63,240

cost of goods sold = 91800 - 63240 = $28,560