Question

18. The materials account of Hetzer Industries reflected the following changes during May: Balance, May 1 180 units @ $30 Received, May 2 60 units @ $32 Issued, May 4 80 units Received, May 27 100 units @ $34 Issued, May 31 150 units Assuming that Hetzer maintains perpetual inventory records, calculate the cost of the ending inventory at May 31 and the cost of the units issued in May using the LIFO method, FIFO METHOD, WEIGHTED AVERAGE

Answer 1

Ans.
1	Perpetual LIFO:
	Received				Issued			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	01-May							180	$30.00	$5,400
	02-May	60	$32.00	$1,920				180	$30.00	$5,400
								60	$32.00	$1,920
	04-May				60	$32.00	$1,920
					20	$30.00	$600	160	$30.00	$4,800
	27-May	100	$34.00	$3,400				160	$30.00	$4,800
								100	$34.00	$3,400
	31-May				100	$34.00	$3,400
					50	$30.00	$1,500	110	$30.00	$3,300
	Total				Cost of Units issued		$7,420	Ending inventory		$3,300
	*In LIFO method the units that have purchased last, are released the first one and the ending inventory
	units remain from the first purchases.
2	Perpetual FIFO:
	Purchase				Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	01-May							180	$30.00	$5,400
	02-May	60	$32.00	$1,920				180	$30.00	$5,400
								60	$32.00	$1,920
	04-May				80	$30.00	$2,400	100	$30.00	$3,000
								60	$32.00	$1,920
	27-May	100	$34.00	$3,400				100	$30.00	$3,000
								60	$32.00	$1,920
								100	$34.00	$3,400
	31-May				100	$30.00	$3,000
					50	$32.00	$1,600	10	$32.00	$320
								100	$34.00	$3,400
	Total				Cost of Units issued		$7,000	Ending inventory		$3,720
	*In FIFO method the units that have purchased first (earliest), are released the first one and the ending inventory
	units remain from the last (recent) purchases.
3	Weighted Average
	Purchase				Cost of goods sold			Balance
	Date	Quantity	Rate	Total cost	Quantity	Rate	Total cost	Quantity	Rate	Total cost
	01-May	180	$30.00	$5,400				180	$30.00	$5,400
	02-May	60	$32.00	$1,920				240	$30.50	$7,320
	04-May				80	$30.50	$2,440	160	$30.50	$4,880
	27-May	100	$34.00	$3,400				260	$31.85	$8,280
	29-Mar				150	$31.85	$4,777	110	$31.85	$3,503
	Total				Cost of Units issued		$7,217	Ending inventory		$3,503
	*Weighted average rate is calculated by using the formula of (Total available balance / Total units available).