Question

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.)

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