The units of an item available for sale during the year were as follows:
Jan. 1 Inventory 1,000 units at $120
Feb. 17 Purchase 1,375 units at $128
July 21 Purchase 1,500 units at $136
Nov. 23 Purchase 1,125 units at $140
There are 1,200 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost by (a) the first-in, first-out method; (b) the last-in, first-out method; and (c) the weighted average cost method.
Answer:
a. $167,700 (1,125 units at $140 plus 75 units at $136) = $157,500 + $10,200 b. $145,600 (1,000 units at $120 plus 200 units at $128) = $120,000 + $25,600 c. $157,800 (1,200 units at $131.50) Cost of merchandise available for sale: units @ $120……………………………………………… $120,000 units @ $128……………………………………………… 176,000 units @ $136……………………………………………… 204,000 units @ $140……………………………………………… 157,500 units (at an average cost of $131.50)………………… $657,500
