Question

The following units of an item were available for sale during the year: Beginning inventory 8,100 units at $180 Sale 5,300 units at $300 First purchase 15,000 units at $185 Sale 13,000 units at $300 Second purchase 16,000 units at $192 Sale 14,000 units at $300 The firm uses the perpetual inventory system, and there are 6,800 units of the item on hand at the end of the year. a. What is the total cost of the ending inventory according to FIFO? $ b. What is the total cost of the ending inventory according to LIFO?

Answer 1

Answer:

a. $1,305,600

b. $1,258,000

Explanation:

FIFO - Assumes that the first goods received by the business will be first ones to be delivered to the final customer

FIFO Inventory =  6,800 units × $ 192 =  $1,305,600

LIFO - Assumes that the last goods purchased are the first ones to be issued to the final customer

LIFO Inventory = 2,800 units  × $180   = $ 504,000

                            2,000 units × $185   =  $ 370,000

                            2,000 units × $ 192  =  $ 384,000

                            Total                          = $1,258,000