Question

Crane Company is a multi product firm. Presented below is information concerning one of its products, the Hawkeye.

Problem 8-6 (Part Level Submission) Crane Company is a multi product firm. Presented below is information concerning one of its products, the Hawkeye. Date Transaction Quantity Price/Cost 1/1 Beginning inventory 3,100 $18 2/4 Purchase 4,100 27 2/20 Sale 45 4/2 Purchase 5,100 35 11/4 Sale 4,300 50 4,600 (a) Your answer is correct. Calculate average-cost per unit. (Round answer to 4 decimal places, e.g. 2.7613.) Average-cost per unit 28.0488 SHOW SOLUTION SHOW ANSWER LINK TO TEXT (b) Compute cost of goods sold, assuming Crane uses: (Round average cost per unit to 4 decimal places, e.g. 2.7631 and final answers to 0 decimal places, e.g. 6,548.) Cost of goods sold (a) Periodic system, FIFO cost flow 5 (b) Perpetual system, FIFO cost flow $ (c) Periodic system, LIFO cost flow $ (d) Perpetual system, LIFO cost flow $ (e) Periodic system, weighted average cost flow $ (f) Perpetual system, moving-average cost flow $ LINK TO TEXT

Answer 1

1.computation of average cost per unit

Step1: cost of goods avaible for sale

=opening inventory +purchases made during the year

=(3100*18)+(4100*27)+(5100*35)

=345000

No of units avaible for sale: 3100+4100+5100

=12300

so average cost per unit =345000/12300 (cost of goods avaible for sale /no of units avaible for sale)

so answer =28.0487

a. perodic system Fifo cost flows

Under fifo system inventory purchased first are issued first

we can calculate cost of goods sold under fifo as under

Total units sold :4600+4300=8900

Units issued	Rate	cost of goods sold
3100	18	55800	(units *rate)
4100	27	110700	(units *rate)
1700	35	59500	(units *rate)
8900		226000
	cost of goods sold	226000

Perpetual system Fifo cost flow
Goods purchased	Cost of goods sold	Inventory balance
date	no of units		cost per unit	no of units sold		cost per unit	cost of goods sold	no of units		cost per units	inventory balance
01-Jan								3100		18	@	55800
02-Apr	4100		27					3100		18	@	55800
Feb-20				3100	@	18	55800	4100		27	@	110700
				1500	@	27	40500	2600		27	@	70200
04-Feb	5100		35					2600		27	@	70200
								5100		35	@	178500
11-Apr				2600	@	27	70200	3400		35	@	119000
				1700	@	35	59500
						Cost of goods sold	226000					119000

C. under Lifo cost flows inventories purchased last are issued first,
we can calculate cost of goods sold under LIFO as under
Total units sold :4600+4300=8900
Unit issued	Rate	cost of goods sold
5100	35	178500	(units *rate)
3800	27	102600	(units *rate)
8900	cost of goods sold	281100

perpetual system Lifo cash flows
Goods purchased	Cost of goods sold	Inventory balance
date	no of units		cost per unit	no of units sold		cost per unit	cost of goods sold	no of units		cost per units	inventory balance
01-Jan								3100		18	@	55800
02-Apr	4100		27					3100		18	@	55800
Feb-20				4100	@	27	110700	4100		27	@	110700
				500	@	18	9000	2600		18	@	46800
04-Feb	5100		35					2600		18	@	46800
								5100		35	@	178500
11-Apr				4300	@	35	150500	800		35	@	28000
								2600		18		46800
						Cost of goods sold	270200				(46800+28000)	74800

. E.perodic system weighted average cost flow .

Total units sold :4600+4300=8900

average cost per unit =28.0487

Cost of goods sold =8900*28.0487=249633.43

F. perpetual system weighted average cost flow.

Goods purchased	Cost of goods sold	Inventory balance
date	no of units		cost per unit	no of units sold		cost per unit	cost of goods sold	no of units		cost per units	inventory balance
01-Jan								3100		18	@	55800
02-Apr	4100		27					3100		18	@	55800
								4100		27	@	110700
Average	7200	(166500/7200)	23.125		166500
Feb-20				4600	@	23.125	106375	2600		23.125	@	60125
04-Feb	5100		35					2600		18	@	46800
								5100		35	@	178500
Average	7700	(225300/7700)	29.26		225300
11-Apr				4300	@	29.26	125818	3600		29.26	@	105336
						Cost of goods sold	232193					105336