Accounting for Inventory: Cost Methods
Not what you're looking for?
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.
Purchase this Solution
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
Purchase this Solution
Free BrainMass Quizzes
Situational Leadership
This quiz will help you better understand Situational Leadership and its theories.
Income Streams
In our ever changing world, developing secondary income streams is becoming more important. This quiz provides a brief overview of income sources.
Transformational Leadership
This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.
Marketing Management Philosophies Quiz
A test on how well a student understands the basic assumptions of marketers on buyers that will form a basis of their marketing strategies.
Organizational Leadership Quiz
This quiz prepares a person to do well when it comes to studying organizational leadership in their studies.