The following three identical units of Item A are purchased during April:
Item A Units Cost
Apr. 2 Purchase 1 $ 68
14 Purchase 1 73
28 Purchase 1 75
Total 3 $216
Average cost per unit $ 72 ($216 ÷ 3 units)
Assume that one unit is sold on April 30 for $118.
Determine the gross profit for April and ending inventory on April 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 Gross Profit April Ending Inventory April 30 $148 ($73 + $75)$50 ($118 – $68) $141 ($68 + $73) $144 ($72 × 2)
