Cost Inventory Method Merchandise Merchandise Inventory Sold a. FIFO $7,728 $21,
ID: 2610865 • Letter: C
Question
Cost Inventory Method Merchandise Merchandise Inventory Sold a. FIFO $7,728 $21,522 b. LIFO 6,660 22,590 c. Average cost 7,215 Cost of merchandise available for sale: 42 units at $180 = $ 7,560 58 units at $195 = 11,310 20 units at $204 = 4,080 30 units at $210 = 6,300 150 units $ 29,250 a. First-in, first-out: Merchandise inventory: 30 units at $210 = 6,300 7 units at $204 = 1,428 37 units $ 7,728 Merchandise sold $ 21,522 b. Last-in, first-out Merchandise inventory: 37 units at $180 = $ 6,660 Merchandise sold $ 22,590 c. Average cost Average cost = 29,250 total cost / 150 total units = $ 195 Merchandise inventory: 37 units at $195 = $ 7,215 Merchandise sold $ Cost Inventory Method Merchandise Merchandise Inventory Sold a. FIFO $7,728 $21,522 b. LIFO 6,660 22,590 c. Average cost 7,215 Cost of merchandise available for sale: 42 units at $180 = $ 7,560 58 units at $195 = 11,310 20 units at $204 = 4,080 30 units at $210 = 6,300 150 units $ 29,250 a. First-in, first-out: Merchandise inventory: 30 units at $210 = 6,300 7 units at $204 = 1,428 37 units $ 7,728 Merchandise sold $ 21,522 b. Last-in, first-out Merchandise inventory: 37 units at $180 = $ 6,660 Merchandise sold $ 22,590 c. Average cost Average cost = 29,250 total cost / 150 total units = $ 195 Merchandise inventory: 37 units at $195 = $ 7,215 Merchandise sold $Explanation / Answer
Merchandise sold can also be calculated as difference between total cost of Merchandise available for sale (i.e. $29,250 in this case) and cost of merchandise inventory
a) FIFO
Cost of merchandise Inventory = $7,728
Cost of merchandise sold = $29,250 - $7,728 = $21,522
b) LIFO
Cost of merchandise Inventory = $6,660
Cost of merchandise sold = $29,250 - $6,660 = $22,590
c) Average cost
Cost of merchandise Inventory = $7,215
Cost of merchandise sold = $29,250 - $7,215 = $22,035
or alternatively it can be calculated as follows:-
Units sold = 150 units - 37 units = 113 units
Average cost = $195
Cost of merchandise sold = Units sold*Average cost = 113 units*$195 = $22,035