the following lots of a particular material were available for use during the year:
beginning inventory 40 units @ P 80
first purchase 40 @ 82
second purchase 60 @ 85
third purchase 60 @ 87
ending inventory 50

the company uses periodic inventory system

Required:
1.compute the cost assigned to ending inventory, assuming FIFO as the costing method
2. compute the cost assigned to ending inventory, assuming the average (moving) as the closing method.

richiem

Hi there,

Here is the way I see it.

You have procured 200 units and utilized 150 (200-150 = ending balance)

Since you are utilizing the FIFO method you would then:

Add up all your purchase totals until you reach 150.

all of first purchase 40
all of second purchase 40
all of third purchase 60
Final Purchase 10
Total: 40+40+60+10 = 150

That means you have 50 remaining (60-10) @ 87 each

Total: 50*87= $4,350.00 Final Inventory

If you were utilizing the LIFO method you would start at the final purchase and work backwards.

richiem

The second half of the question:

Easiest way:

Total cost ($16,800) / # units (200) = avg. cost each unit ($84)

Take the average cost ($84) * the remaining units (50) = remaining inventory ($4,200.00)