Select your language

Suggested languages for you:
Log In Start studying!
Answers without the blur. Just sign up for free and you're in → Illustration

2PSA_3

Expert-verified
Financial & Managerial Accounting
Found in: Page 266
Financial & Managerial Accounting

Financial & Managerial Accounting

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

Short Answer

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

See the step by step solution

Step by Step Solution

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

Most popular questions for Business-studies Textbooks

Icon

Want to see more solutions like these?

Sign up for free to discover our expert answers
Get Started - It’s free

Recommended explanations on Business-studies Textbooks

94% of StudySmarter users get better grades.

Sign up for free
94% of StudySmarter users get better grades.