Question

Exercise 17.1 Using the various costing methods of inventory valuation. LO 17-1 Information about Vinzant Company's inventory of one item follows. Number of eBook Explanation Units 165 Unit Cost Beginning inventory, January 1 Purchases: April August October Ending inventory, December 31 $300 eterences 205 305 225 310 175 165 312 1. Compute the cost of the ending inventory under the average cost method. 2. Compute the cost of the ending inventory under the FIFO method. 3. Compute the cost of the ending inventory under the LIFO method. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the cost of the ending inventory under the FIFO method. Merchandise available for sale Ending Inventory

Answer 1

1	Average cost method:
	Inventory is valued at average cost
	Average cost=Total cost of units available for sale/Total units available for sale
				Units	Unit cost	Total cost
	Beg. Inventory			165	300	49500
	Purchases:
	April			205	305	62525
	August			225	310	69750
	October			175	312	54600
	Total			770		236375
	Average cost=236375/770=$ 306.9805
	Cost of the ending inventory=165*306.9805=50651.78=$ 50652
2	FIFO method:
	Under FIFO,Goods purchased first are sold first
	Hence,Ending inventory consist of units from latest purchase
	Cost of the ending inventory:
						$
	From Oct purchase		165 units at $ 312		(165*312)	51480
	Cost of the ending inventory=$ 51480
3	LIFO method:
	Under LIFO,Goods purchased last are sold first
	Hence,Ending inventory consist of units from earlier purchase
	Cost of the ending inventory:
						$
	From Apr purchase		165 units at $ 305		(165*305)	50325
	Cost of the ending inventory=$ 50325