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tammietoes
Nov 23, 2010, 08:06 AM
Hi guys, I'm really confused with a Q I was hoping you could help me with!

13 Jan purchases 200 - total cost 7,200
08 Feb purchases 400 - total cost 15,200
11 Mar purchases 600 - total cost 24,000
12 April purchases 400 - total cost 14,000
15 June purchases 500 - total cost 14,000

10 Feb sales 500 - total sales 25,000
20 Apr sales 600 - total sales 27,000
25 Jun sales 400 - total sales 15,200

Other expenses occurred amounting to €2,300

I've to calculate the Fifo & Lifo and I'm so confused and pretty much pulling my hair out.. Please help! Thank you so much...

pready
Nov 23, 2010, 08:58 AM
The first thing you should do is calculate the cost per unit of your purchases.
Jan 13 = 7,200 / 200 = $36 a unit
Feb 08 = 15,200 / 400 = $38 a unit
Mar 11 = 24,000 / 600 = $40 a unit
Apr 12 = 14,000 / 400 = $35 a unit
Jun 15 = 14,000 / 500 = $28 a unit

Now you can calculate FIFO and LIFO

FIFO stands for First-in first-out
for your Feb 10 sales you will calculate the cost of inventory as
13 Jan purchases of 200 units @ $36 a unit and the 8 Feb purchases of 300 units @ 38 a unit

20 Apr Sales
08 Feb Purchases of 100 units @ 38 a unit
11 Mar purchases of 500 units @ $40 a unit

25 Jun sales
11 Mar purchases of 100 units @ $40 a unit
12 April purchases of 300 units @ $35 a unit.

Now all you need to do is calculate the total cost of sales and this will be your COGS

LIFO stands for Last-in First-out and is calculated in a similar way
10 Feb sales
08 Feb purchases of 400 units @ $38 a unit
13 Jan purchases of 100 units @ $36 a unit

20 April sales
12 April purchases of 400 units @ $35 a unit
11 mar purchases of 200 units @ $40 a unit

25 Jun sales
15 Jun purchases of 400 units @ $28 a unit.

Your remaining inventory will be:
FIFO
12 Apr purchases of 100 units @ $35 a unit
15 Jun purchases of 500 units @ $28 a unit

LIFO
13 Jan purchases of 100 units @ $36 a unit
11 Mar purchases of 400 units @ $40 a unit
15 Jun purchases of 100 units @ $28 a unit

tammietoes
Nov 23, 2010, 03:21 PM
Thank you so much!