Detemining Cost of Inventory
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The beginning inventory and purchases of an item for the period were as follows:
Beginning inventory 6 units at $73 each
First purchase 10 units at $72 each
Second purchase 18 units at $74 each
Third purchase 10 units at $75 each
The company uses the periodic system, and there were 15 units in the inventory at the end of the period. Determine the cost of the 15 units in the inventory by each of the following methods, presenting details of your computations: (a) first-in, first-out; (b) last-in, first-out; (c) average cost.
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Solution Summary
Solution describes the methodology to determine cost of closing inventory by LIFO, FIFO and average cost method.
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(a)first in first out
In this a firm records the first units purchased as the first units sold.
Ending inventory of 15 units will include 10 units (@$75 each) of third purchase ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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