LIFO inventory method

At Ask Me Help Desk you can ask questions in any topic and have them answered for free by our experts. To ask questions or participate in answering them you must register for a free account. By registering you will be able to:

Get free answers from experts in any of our 300+ topics.
Accept money for answers that you provide.
Communicate privately with other members (PM).
See fewer ads.

Sign Up!

Answer this Question

Ask about Accounting

Ask about another Subject

PDA

jahubb

Jan 23, 2008, 01:06 PM

nandhini10

Jan 24, 2008, 03:05 AM

Can someone tell me if this is correct?
September 1 On hand, 300 units @<hidden> 1.50 each
September 6 purchased 1000 units @<hidden> 1.65
September 18 purchased 800 units @<hidden> 1.75 each
Total cost of goods available for sale = $3500
September 30 on hand, 425 units
Question 1.
If the company uses the weighted average cost method, would the amount assigned to the September 30 inventory be:
A. 656.25 B. 694.17 C. 708.33 D. 718.75 My answer was b, but I was incorrect can someone show me why.

Question 2.

If the company uses the LIFO inventory method, the ending inventory at September 30 would be:
A. 637.50 B. 656.25 C. 722.50 D. 743.75
Is c. 722.50 the correct answer, Thank You in advance

weighted average cost method
Average Unit cost: $3500/2100 = $1.666667
Ending inventory: 425 units @<hidden> $1.666667 = $708.3333

ANSWER is C

LIFO Method

1675 units sold
           = 800 units at $1.75 unit cost
           = 875 units at $1.65 unit cost

           Cost of goods sold = 800*1.75+875*1.65
           = $1,400 + $1,443.75 = $2,843.75

Cost of ending inventory
           = 125 units at $1.65 unit cost
           = 300 units at $1.50 unit cost
           = $206.25 + $450 = $656.25

ANSWER is B

p8888

Jan 27, 2008, 11:24 AM

c and b