Share
Explore BrainMass

Inventory Costing Methods: Periodic System

The following information is available concerning the inventory of Carter Inc.:

Units Unit Cost

Beginning Inventory 200 $10

Purchases:

March 5 300 11

June12 400 12

August 23 250 13

October 2 150 15

During the year, Carter sold 1,000 units. It uses a periodic inventory system.

Required

1. Calculate ending inventory and cost of good sold for each of the following three methods:
a. Weighted average
b. FIFO
c. LIFO

2. Assume an estimated tax rate of 30 %. How much more or less (indicate which) will Carter pay in taxes by using FIFO instead of LIFO? Explain your answer.

Solution Preview

(1)
a. The total costs of inventory = 200 units * $10 + 300 units * $11 + 400 units * $12 + 250 units * $13 + 150 units * $15 = $15,600
Weighted average cost per unit = $15,600 / (200 + 300 + 400 + 250 + 150) = $12
cost of goods sold = 1,000 units * $12
Ending inventory = ...

Solution Summary

This response will calculate the ending inventory and cost of goods, and the amount of taxes Carter Inc will need to pay.

$2.19