The units of an item available for sale during the year were as follows: Jan. 1 Inventory 12 units at $5,400 $ 64,800

The units of an item available for sale during the year were as follows:

Jan.  1 Inventory 12 units at $5,400 $ 64,800

Aug.  7 Purchase 18 units at $6,000 108,000

Dec. 11 Purchase 15 units at $6,480 97,200

Available for sale 45 units $270,000

There are 14 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average cost method.

Answer:

a. First-in, first-out (FIFO) method: $90,720 = 14 units × $6,480

b. Last-in, first-out (LIFO) method: $76,800 = [(12 units × $5,400) + (2 units × $6,000)]

c. Weighted average cost method: $84,000 (14 units × $6,000), where average cost = $6,000 = $270,000 ÷ 45 units