Question

Periodic Inventory by Three Methods

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

Jan. 1	Inventory	1,005 units @ $126
Feb. 17	Purchase	1,425 units @ $127
Jul. 21	Purchase	1,555 units @ $130
Nov. 23	Purchase	1,130 units @ $132

There are 1,205 units of the item in the physical inventory at December 31. The periodic inventory system is used. Do not round intermediate calculation and round final answer to nearest whole value.

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

Cost of goods available for sale = 1,005 * $126 + 1,425 * $127 + 1,555 * $130 + 1,130 * $132
Cost of goods available for sale = $658,915

Number of units available for sale = 1,005 + 1,425 + 1,555 + 1,130
Number of units available for sale = 5,115

Number of units in ending inventory = 1,205

Answer a.

First-in, First-out Method:

Cost of Ending Inventory = 1,130 * $132 + 75 * $130
Cost of Ending Inventory = $158,910

Answer b.

Last-in, First-out Method:

Cost of Ending Inventory = 1,005 * $126 + 200 * $127
Cost of Ending Inventory = $152,030

Answer c.

Weighted Average Method:

Cost per unit = Cost of goods available for sale / Number of units available for sale
Cost per unit = $658,915 / 5,115
Cost per unit = $128.82

Cost of Ending Inventory = 1,205 * $128.82
Cost of Ending Inventory = $155,228