Question

Cost Flow Methods The following three identical units of Item PX2T are purchased during April: Item Beta Units Cost April 2 Purchase 1 $293 April 15 Purchase 1 296 April 20 Purchase 1 299 Total 3 $888 Average cost per unit $296 ($888 ÷ 3 units) Assume that one unit is sold on April 27 for $361. Determine the gross profit for April and ending inventory on April 30 using the (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average cost method. Gross Profit Ending Inventory a. First-in, first-out (FIFO) $ $ b. Last-in, first-out (LIFO) $ $ c. Weighted average cost

Answer 1

Answer:

(a) $68; $595

(b) $62; $589

(c) $65; $592

Explanation:

a). First in first out (FIFO) :-

Gross Profit = Sales - Cost

                     = $361 - $293

                     = $68

Ending Inventory = $296 + $299

                            = $595

b). Last in First Out (LIFO) :-

Gross Profit = Sales - Cost

                     = $361 - $299

                     = $62

Ending Inventory = $293 + $296

                             = $589

c). Weighted average cost :-

Gross Profit = Sales - Cost

                     = $361 - $296

                     = $ 65

Ending Inventory = $296 × 2

                             = $592