Can someone tell me if this is correct?
September 1 On hand, 300 units @ 1.50 each
September 6 purchased 1000 units @ 1.65
September 18 purchased 800 units @ 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

Quote:

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Originally Posted by jahubb

Can someone tell me if this is correct?
September 1 On hand, 300 units @ 1.50 each
September 6 purchased 1000 units @ 1.65
September 18 purchased 800 units @ 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

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

C and b