Question

Calculate the average cost per unit, using a perpetual inventory system. Assume a sale of 420...

Calculate the average cost per unit, using a perpetual inventory system. Assume a sale of 420 units occurred on June 15 for a selling price of $8 and a sale of 50 units on June 27 for $9. (Round answers to 3 decimal places, e.g. 5.125.)

Date

Explanation

Units

Unit Cost

Total Cost

June 1

Inventory

150

$5

$750

12

Purchases

350

6

2,100

23

Purchases

240

7

1,680

30

Inventory

270

June 1 $enter a dollar amount 5

June 12 $enter a dollar amount 5.700

June 15 $enter a dollar amount 5.700

June 23 $enter a dollar amount 6.675

June 27 $enter a dollar amount 6.675

(b1) Calculate cost of the ending inventory and the cost of goods sold for each cost flow assumption, using a perpetual inventory system. Assume a sale of 420 units occurred on June 15 for a selling price of $8 and a sale of 50 units on June 27 for $9. (Round answers to 0 decimal places, e.g. 125.)

Homework Answers

Answer #1

Average cost:

Date Calculation $ per unit
June 1 5.000
June 12 {(150×5)+(350×6)}/(150+350) 5.700
June 15 5.700*
June 23 {(80×5.7)×(240×7)}/(80+240) 6.675
June 27 6.675*

* $ per unit was same as previous date because there is no additions for the inventory.

Ending inventory = 270 units

Goods available for sale = (150+350+240) = 740 units

Using cost flow assumptions :

FIFO LIFO Average cost
Ending inventory

(240 units × $ 7 each)+(30 units × $ 6 each)

= $ 1,860

(80 units × $ 5 each)+(190 units × $ 7 each)

= $ 1,730

270 units × $ 6.675 each

= $ 1,802

Cost of goods sold

{(150 units × $ 5 each)+(270 units × $ 6 each)} + (50 units × $ 6 each)

= $ 2,670

{(350 units × $ 6 each)+(70 units × $ 5 each)} + (50 units × $ 7 each)

= $ 2,800

(420 units × $ 5.7 each)+(50 units × $ 6.675 each)

= $ 2,728

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