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### Financial & Managerial Accounting

Book edition 7th
Author(s) John J Wild, Ken W. Shaw, Barbara Chiappetta
Pages 1096 pages
ISBN 9781259726705

# Refer to the information in Problem 5-1A and assume the periodic inventory system is used. Required 1. Compute cost of goods available for sale and the number of units available for sale. 2. Compute the number of units in ending inventory. 3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. (Round all amounts to cents.) 4. Compute gross profit earned by the company for each of the four costing methods in part 3.

 FIFO $14,800 LIFO$12,700 Weighted Average $13,640 Specific Identification$14,060
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## Definition of Average Cost

The average cost can be defined as the per-unit cost calculated by the business entity, considering the total cost incurred in the acquisition and the total units acquired.

## Cost assigned to ending inventory

(a) FIFO

 Particular Units X Per unit = Total cost March 25 200 X $62 =$12,400 March 18 40 X $60 =$2,400 Total $14,800 (b) LIFO:  Particular Units X Per unit = Total cost March 1 100 X$50 = $5,000 March 5 140 X$55 = $7,700 Total$12,700

(c) Weighted Average:

(d) Specific identification:

 Particular Units x Per unit Cost = Total cost Beginning inventory 20 x $50 =$1,000 March 5 60 x $55 = 3,300 March 18 80 x$60 = 4,800 March 25 80 x $62 = 4,960 Total$14,060