The following three identical units of Item Beta are purchased during June:
Item Beta Units Cost
June 2 Purchase 1 $ 50
12 Purchase 1 60
23 Purchase 1 70
Total 3 $180
Average cost per unit $ 60 ($180 ÷ 3 units)
Assume that one unit is sold on June 27 for $110.
Determine the gross profit for June and ending inventory on June 30 using the (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average cost methods.
Answer:
a. First-in, first-out (FIFO) b. Last-in, first-out (LIFO) c. Weighted average cost June June 30 Gross Profit Ending Inventory $50 ($110 – $60) $120 ($60 × 2)
