Fortune Stores uses the periodic inventory system for its merchandise inventory.
ID: 2402186 • Letter: F
Question
Fortune Stores uses the periodic inventory system for its merchandise inventory. The April 1 inventory for one of the items in the merchandise inventory consisted of 120 unites with a unite cost of $330. Transaction for this item during April were as following:
a. Calculate the cost of goods sold and the ending inventory cost for the month of April using the weighted-average cost method. Round your final answer to the nearest dollar.
b. Calculated the cost of goods sold and the ending inventory cost for the month of April using the first-in, first-out method.
c. Calcualted the cost of goods sold and the ending inventory cost for the month of April using the last-in, last-out method.
Unites Cost April 1 Beginning Inventory 120 330 April 9 Purchased 40 345 April 14 Sold (80 unties @ $550) April 23 Purchased 20 350 April 29 Sold (40 unites @ $550)Explanation / Answer
Solution:
(a) weighted-average cost per unit = Total cost / total units
= (120 x330 + 40 x345+ 20x 350) / (120 + 40 + 20)
= $60,400 / 180
= $335.56
cost of goods sold = units sold x $335.56 = 120 x $335.56 = $40,267.20
ending inventory cost = units the end x $335.56 = 60x $335.56 = $20,133.60
(b) FIFO method
cost of goods sold = 80 x $330 + 40 x $330 = $39,600
ending inventory cost = 40 x$345 +20 x $350 = $20800
(c) LIFO method
cost of goods sold = 40 x $345 + 40 x $330 + 20 x $350 + 20 x $330 =$40,600
ending inventory cost = 60 x $330 = $19,800