Answer:
FIFO = $17,000
LIFO = $9,350
Average-cost = $14,450
Explanation:
Initial inventory: 150 units, at a total cost of $16,500 ($110 per unit).
Purchases: 300 units, at a total cost of $60,000 ($200 per unit).
Final inventory: 85 units.
Unit sold: 150+300-85=365 units
FIFO (first in, first out)
In this method, we considered that the units that were first in the inventory were sold first.
Initial inventory: 150 u. x $110 per unit = $16,500 $16,500
Variations: 300u. x $200 per unit = $60,000 $76,500
-150 u. x $110 per unit = -$16.500 $60,000
-215 u. x $200 per unit = -$43,000 $17,000
Final inventory 85 u. x $200 per unit = $17,000
LIFO (last in, first out)
In this method, we considered that the first units that leave the inventory are the last that have arrived.
Initial inventory: 150 u. x $110 per unit = $16,500 $16,500
Variations: 300u. x $200 per unit = $60,000 $76,500
-300 u. x $200 per unit = -$60,000 $16,500
-65 u. x $110 per unit = -$7,150 $ 9,350
Final inventory 85 u. x $110 per unit = $9,350
Average cost
In this method, every unit that left the inventory is valuated with an average-cost per unit of the inventory.
Initial inventory: 150 u. x $110 per unit = $16,500 $16,500
Variations: 300u. x $200 per unit = $60,000 $76,500
-365 u. x <em>$170*</em> per unit = -$62,050 $14,450
Final inventory 85 u. x $170 per unit = $14,450
<em>*average cost = (150*110+300*200)/(150+300)=76500/450=$170</em>
