Check My Work eBook Exercise 9-27 Computations Involving Different Cost-Flow Ass
ID: 2811221 • Letter: C
Question
Check My Work eBook Exercise 9-27 Computations Involving Different Cost-Flow Assumptions Arnold Company's raw material purchases during January, its first month of operations, were as follows: Cost per Unit Total Cost Quantity 1/2 Purchased. . 1/8 Purchased 1/15 Purchased 1/23 Purchased. . 1,200 pounds 2,200 pounds 2,800 pounds 1,500 pounds $2.20 2.25 2.28 2.30 2.32 2,640 4,950 6,384 3,450 6,960 24,384 Total Goods Available for Use..... . . .. 10,700 pounds .. .. . . . . The inventory on January 31 was 3,500 pounds. Compute the cost of the inventory on January 31 and the cost of raw materials issued to production for January under each of the following cost-flow assumptions: a. FIFO b. Weighted average C. LIFO. For weighted average: In your computations, round the per unit cost to four decimal places. For all methods, round your final answers to the nearest dollar FIFO Weighted Average LIFO Raw Materials Available for Use Less Ending Inventory Raw Materials Issued to Production Check My Work Icon KayExplanation / Answer
Calculation of ending Inventory using FIFO The units from latest purchases will form part of ending inventory if we use the FIFO method Pounds Rate per pound Total 1/28 Purchased 3000 $2.32 $6,960.00 1/23 Purchased 500 $2.30 $1,150.00 Ending Inventory Cost under FIFO $8,110.00 Calculation of ending Inventory using Weighted Average Unit cost under weighted average method = Total cost of goods available / Total Quantity available Unit cost under weighted average method = $24384 / 10700 pounds = $2.2789 per unit Cost of ending Inventory = 3500 pounds * $2.2789 = $7,976 Calculation of ending Inventory using LIFO The units from old purchases will form part of ending inventory if we use the LIFO method Pounds Rate per pound Total 1/2 Purchased 1200 $2.20 $2,640.00 1/8 Purchased 2200 $2.25 $4,950.00 1/15 Purchased 100 $2.28 $228.00 Ending Inventory Cost under LIFO $7,818.00 FIFO Weighted Average LIFO Raw Materials Available for use $24,384.00 $24,384.00 $24,384.00 Less : Ending Inventory $8,110.00 $7,976.00 $7,818.00 Raw Materials Issued to Production $16,274.00 $16,408.00 $16,566.00