Question

Inventory Costing Methods-Periodic Method Merritt Company uses the periodic inventory system. The following May data are for an item in Merritt's inventory: May 1 Beginning inventory 450 units $34 per unit 12 Purchased 400 units 539 per unit 16 Sold 480 units 24 Purchased 460 units @ $40 per unit Calculate the cost of goods sold for May and ending inventory at May 31 using (a) first-in, first-out, (b) last-in, first-out, and (c) the weighted average cost methods. Do not round until your final answers. Round your final answers to the nearest dollar. A First-in, First-out Ending Inventory Cost of Goods Sold: 8. Last-in, first-out: Ending Inventory Cost of Goods Sold: C Weighted average cost Ending Inventory Cost of Goods Sold Check

Answer 1

A. First in First out

Ending inventory = (370 X $39) + (460 X $40) = $32,830

Cost of goods sold = (450 X $34) + (30 X $39) = $16,470

B. Last in First out

Ending inventory = (450 X $34) + (380 X $39) = $30,120

Cost of goods sold = (460 X $40) + (20 X $39) = $19,180

C. Weighted average cost

Total units available for sale = 450 + 400 + 460 = 1,310

Total cost of goods available for sale = (450 X $34) + (400 X $39) + (460 X $40) = $49,300

Weighted average cost per unit = $49,300 / 1,310 = $37.63

Ending inventory = (450 + 400 + 460 - 480) X $37.63 = $31,236

Cost of goods sold = 480 X $37.63 = $18,064