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    idmedesigns's Avatar
    idmedesigns Posts: 2, Reputation: 1
    New Member
     
    #1

    Sep 26, 2009, 08:54 PM
    How do I calculate this?
    Okay, starting to understand FIFO, need to understand LIFO. I have a problem which states this:

    Began 2008 with 1,200 toys which cost $9 each. During year made following purchases:

    Date Units Purchased Cost per Unit Total cost

    3/18 500 $9.50 4,750
    6/4 700 10.00 7,000
    8/28 400 10.50 4,200
    11/13 900 11.50 10,350
    TOTAL 2500 26,300
    Year end inventory is 800 units on Dec 31, 08. WHat is cost of goods sold?
    I know I add 1200 + 2500 =3700. I subtract 3700-800=2900. I'm confused, 2700 is more than all my units purchsed. Do I use all my total cost for each units purchased and add the extra 400 onto 3/18 at 500/units purchased? I'm confused can I get some help Please?
    morgaine300's Avatar
    morgaine300 Posts: 6,561, Reputation: 276
    Uber Member
     
    #2

    Sep 26, 2009, 10:46 PM

    You're making it complicated.

    You purchased 3700 units. Did you not purchase those that were in beginning inventory? Why do you think you were supposed to add the 1200 to the 2500 to begin with?

    Stick the beginning inventory at the top of the list and stick 1/1 on it. Then change your totals to 3700 units and $37,100 cost. So there isn't any "extra 400" units.

    Can you get it with that little problem straightened out?
    rehmanvohra's Avatar
    rehmanvohra Posts: 739, Reputation: 27
    Senior Member
     
    #3

    Sep 27, 2009, 01:00 AM

    Under FIFO method, the ending inventory is from the latest purchases and under LIFO it is from the opening inventory. You can do the rest

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