Problem 8-5 (Part Level Submission) Some of the information found on a detail in

Question

Problem 8-5 (Part Level Submission)

Some of the information found on a detail inventory card for Sage Inc. for the first month of operations is as follows.

Date

No. of Units

Unit Cost

Issued,
No. of Units

Balance,
No. of Units

A, Calculate average-cost per unit.

B. From these data compute the ending inventory on each of the following bases. Assume that perpetual inventory records are kept in units only. (1) First-in, first-out (FIFO). (2) Last-in, first-out (LIFO). (3) Average-cost.

C. If the perpetual inventory record is kept in dollars, and costs are computed at the time of each withdrawal, would the amounts shown as ending inventory in (1), (2), and (3) above be the same? What amount would be shown as ending inventory?

Date

No. of Units

Unit Cost

Issued,
No. of Units

Balance,
No. of Units

January 2 1,300 $3.93 1,300 7 800 500 10 700 4.19 1,200 13 600 600 18 1,100 4.32 400 1,300 20 1,100 200 23 1,400 4.45 1,600 26 900 700 28 1,700 4.59 2,400 31 1,400 1,000

Explanation / Answer

Solution:-

(A) Avg cost per unit = [(1300*3.93) + (700*4.19 )+ (1100*4.32) + (1400*4.45) + (1700*4.59)] / 6200

== 4.33/unit

(B) Ending Inventory :-

FIFO:- ( 1000*4.59 ) = 4590

LIFO :- ( 1000*3.93) = 3930

Avg Cost :- (1000*4.33) = 4330

(C) FIFO :- (1000*4.59) = 4590 same as above

LIFO :- ( 200*3.93) + (500*4.45) + (300*4.59) = 4388

  

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