Question

The accounting records of Sheffield Corp. show the following data.

Beginning inventory		2,940 units at	$6
Purchases		7,580 units at	$8
Sales		9,477 units at	$11

Calculate average unit cost. (Round answer to 3 decimal places, e.g. 5.125.)

A)Average unit cost $ ( ) per unit

Determine cost of goods sold during the period under a periodic inventory system using the FIFO method, the LIFO method, and the average-cost method. (Round answers to 0 decimal places, e.g. 125.)

B) Cost of goods sold for FIFO $ () LIFO $() average-cost $()

Answer 1

Answer A.

Cost of goods available for sale = 2,940 * $6.00 + 7,580 * $8.00
Cost of goods available for sale = $78,280

Number of units available for sale = 2,940 + 7,580
Number of units available for sale = 10,520

Average unit cost = Cost of goods available for sale / Number of units available for sale
Average unit cost = $78,280 / 10,520
Average unit cost = $7.441

Answer B.

FIFO:

Units sold includes 2,940 units from beginning inventory and 6,537 units from purchases

Cost of goods sold = 2,940 * $6.00 + 6,537 * $8.00
Cost of goods sold = $69,936

LIFO:

Units sold includes 1,897 units from beginning inventory and 7,580 units from purchases

Cost of goods sold = 1,897 * $6.00 + 7,580 * $8.00
Cost of goods sold = $72,022

Average Cost:

Cost of goods sold = Number of units sold * Average unit cost
Cost of goods sold = 9,477 * $7.441
Cost of goods sold = $70,518