Question

ABX Corp. started their business this year and purchased the following inventory: 15,000 unites on January @ $10 each, 25,000 units in February @ $12 each, 35,000 units in March @ 12 each, 50,000 units in April @ $14 each, 20,000 units in May @ $15 each, 30,000 units in June @ $ 16 each, and 25,000 units in July @ $18 each. During the year they sold 140,000 units of their product. Calculate the value of the ending inventory utilizing the Average Cost, LIFO and FIFO methods.

Answer 1

Ending Inventory = Units purchased- Units sold = 200,000 - 140,000 = 60,000

Average cost: $ 840,000

January	15000	10	150000
February	25000	12	300000
March	35000	12	420000
April	50000	14	700000
May	20000	15	300000
June	30000	16	480000
July	25000	18	450000
Total	200,000		2,800,000

Average cost	Ending inventory
= 2,800,000 / 200,00 = 14	= 60,000 * 14 = 840,000

LIFO: $ 1,005,000

July	25000	18	450000
June	30000	16	480000
May	5000	15	75000
Ending inventory	60,000		1,005,000

FIFO: $ 690,000

January	15000	10	150000
February	25000	12	300000
March	20000	12	240000
Ending inventory	60,000		690,000