Cortez Company sells chairs that are used at computer stations. Its beginning in
ID: 2457137 • Letter: C
Question
Cortez Company sells chairs that are used at computer stations. Its beginning inventory of chairs was 100 units at $60 per unit. During the year, Cortez made two batch purchases of this chair. The first was a 150-unit purchase at $68 per unit; the second was a 200-unit purchase at $72 per unit. During the period, it sold 270 chairs.
Determine the amount of products costs that would be allocated to cost of goods sold and ending inventory, assuming that Cortez uses
A.FIFO
B.LIFO
C.Weighted average
Explanation / Answer
Given:
Units
Cost Per unit
Total Cost
A
B
A*B
Beginning Inventory
100
$ 60.00
$ 6,000.00
Purchase -1
150
$ 68.00
$ 10,200.00
Purchase -2
200
$ 72.00
$ 14,400.00
Cost of Goods Available
450
$ 30,600.00
A.
FIFO Method:
Calculation of Cost of Goods sold:
Units
Cost Per unit
Total Cost
A
B
A*B
Beginning Inventory
100
$ 60.00
$ 6,000.00
Purchase -1
150
$ 68.00
$ 10,200.00
Purchase -2
20
$ 72.00
$ 1,440.00
Cost of Goods Sold
270
$ 17,640.00
Calculation of Ending inventory :
Cost of Goods Available
$ 30,600.00
Less: Cost of Goods Sold
$ (17,640.00)
Ending inventory
$ 12,960.00
B.
LIFO Method:
Calculation of Cost of Goods sold:
Units
Cost Per unit
Total Cost
A
B
A*B
Purchase -2
200
$ 72.00
$ 14,400.00
Purchase -1
70
$ 68.00
$ 4,760.00
Cost of Goods Sold
270
$ 19,160.00
Calculation of Ending inventory :
Cost of Goods Available
$ 30,600.00
Less: Cost of Goods Sold
$ (19,160.00)
Ending inventory
$ 11,440.00
C.
Weighted average Method:
Cost of Goods Available
$ 30,600.00
Total Units Available
450
Average cost per unit = 30600 / 450
$ 68.00
Units
Cost Per unit
Total Cost
A
B
A*B
Cost of Goods sold
270
$ 68.00
$ 18,360.00
Ending Inventory (450-270)
180
$ 68.00
$ 12,240.00
Given:
Units
Cost Per unit
Total Cost
A
B
A*B
Beginning Inventory
100
$ 60.00
$ 6,000.00
Purchase -1
150
$ 68.00
$ 10,200.00
Purchase -2
200
$ 72.00
$ 14,400.00
Cost of Goods Available
450
$ 30,600.00
A.
FIFO Method:
Calculation of Cost of Goods sold:
Units
Cost Per unit
Total Cost
A
B
A*B
Beginning Inventory
100
$ 60.00
$ 6,000.00
Purchase -1
150
$ 68.00
$ 10,200.00
Purchase -2
20
$ 72.00
$ 1,440.00
Cost of Goods Sold
270
$ 17,640.00
Calculation of Ending inventory :
Cost of Goods Available
$ 30,600.00
Less: Cost of Goods Sold
$ (17,640.00)
Ending inventory
$ 12,960.00
B.
LIFO Method:
Calculation of Cost of Goods sold:
Units
Cost Per unit
Total Cost
A
B
A*B
Purchase -2
200
$ 72.00
$ 14,400.00
Purchase -1
70
$ 68.00
$ 4,760.00
Cost of Goods Sold
270
$ 19,160.00
Calculation of Ending inventory :
Cost of Goods Available
$ 30,600.00
Less: Cost of Goods Sold
$ (19,160.00)
Ending inventory
$ 11,440.00
C.
Weighted average Method:
Cost of Goods Available
$ 30,600.00
Total Units Available
450
Average cost per unit = 30600 / 450
$ 68.00
Units
Cost Per unit
Total Cost
A
B
A*B
Cost of Goods sold
270
$ 68.00
$ 18,360.00
Ending Inventory (450-270)
180
$ 68.00
$ 12,240.00