Question

Bluefin tuna is legendary and while some can be purchased at $40/lb, the price can fluctuate to $5,000 a pound. Below is the inventory of 2340 Sushi on its Bluefin tuna for the month of July: Date Explanation Beg. Inventory Purchases Cost per lb $90 Pound 20 1800 10,00 0 18,750 4170 34720 July 1 July 12 July 19 July 26 100 100 Purchases 150 125 30 Purchases 139 When ending inventory was taken on July 31, only 35 pounds were left. Compute both the ending inventory and cost of food sold on this item on July 3 using both the FIFO and the weighted average methods.

Answer 1

Cost of ending inventory using FIFO = (30 * $139) + (5 * $125) = $4,795

Using weighted average -

Weighted average cost per unit = $34,720 / (20 + 100 + 150 + 30)

Weighted average cost per unit = $34,720 / 300

Weighted average cost per unit = $115.73

Cost of ending inventory using weighted average method = (35 * $115.73) = $4,050.55

Cost of goods sold under FIFO = $34,720 - $4,795 = $29,925

Cost of goods sold under weighted average method = $34,720 - $4,055.55 = $30,664.45

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