Question

Question 1: Pillsbury Company's manufactures many products for use in the airline industry. Presented below is information concerning one of its products, the Orbit. Date Transaction Quantity Price/Cost $31 50 3/6 6/26 8/2 10/31 Beginning Sale Purchase Purchase Sale 1,600 1,000 3,500 2,000 4,000 34 52 Required Compute the cost of goods sold of the following bases. Assume that the company used the periodic system to report its inventory. Carry unit costs to the nearest cent. (1) First-in, first-out (FIFO) A. (2) Last-in, first-out (LIFO) (3) Average cost. B. Repeat your calculations in (1), (2), and (3) above, under the assumption that the company used the perpetual system to report its inventory. Carry average unit costs to at least two decimal places.

Answer 1

	Unit	Unit Cost	Total Cost
Beginning inventory	1600	31	49600
Purchase 1	3500	33	115500
Purchase 2	2000	34	68000
Total	7100		233100

a) Calculate cost of goods sold : Periodic

FIFO (1600*31+3400*33)	161800
LIFO (2000*34+3000*33)	167000
Average cost (233100/7100) = 32.83*5000	164150

b) Calculate cost of goods sold : Perpetual

FIFO (1600*31+3400*33)	161800
LIFO (2000*34+2000*33+1000*31)	165000
Average cost (1000*31+4000*33.13)	163520