Explore BrainMass

Explore BrainMass

    Accounting for Inventory: Cost Methods

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    A new textbook is published in the spring of 2011. Your campus bookstore buys 400 copies
    at $70 each in June, an additional 1,000 copies in August at $72 each, and 600 copies in December at $75 each. At the end of December 2011, the bookstore has sold 1,900 copies of the text.
    Find the cost of goods sold and the cost of ending inventory:
    a) under the weighted average cost method.
    b) under the FIFO method.
    c) under the LIFO method.
    Using your calculations as a guide, explain how different inventory costing methods affect the numerator and denominator of the inventory turnover ratio when unit costs are increasing.
    Conclude your explanation by identifying the method that produces the highest (and lowest) inventory turnover ratio.

    © BrainMass Inc. brainmass.com March 5, 2021, 12:53 am ad1c9bdddf
    https://brainmass.com/business/inventory/accounting-for-inventory-cost-methods-545378

    Solution Summary

    Calculated the cost of goods sold and the cost of ending inventory: under the weighted average cost method, under the FIFO method and under the LIFO method.
    Explained how different inventory costing methods affect the numerator and denominator of the inventory turnover ratio

    $2.49

    ADVERTISEMENT