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	5	units at $25	$125
Aug. 7	Purchase	19	units at $28	532
Dec. 11	Purchase	13	units at $29	377
		37	units	$1,034

There are 18 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 First in, first out (FIFO)

Inventory cost = (13 × 29) + (5 × 28) = $517

Inventory at 31st December is costing under FIFO method is $517

b Last in, first out (LIFO)

Inventory cost = (5 × 25) + (13 × 28) = $489

Inventory at 31st December is costing under LIFO method is $489

c Weighted average cost

Weighted average per unit cost = 1,034 / 37 = 27.94

Inventory cost = (18 × 27.94) = $503

Inventory at 31st December is costing under weighted average method is $503

The above are the detailed calculations of ending inventory.

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