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Over [174]
3 years ago
11

Cortez Company sells chairs that are used at computer stations. Its beginning inventory of chairs was 100 units at $60 per unit.

During the year, Cortez made two batch purchases of this chair. The first was a 150-unit purchase at $68 per unit; the second was a 200-unit purchase at $72 per unit. During the period, it sold 270 chairs. Required Determine the amount of product costs that would be allocated to cost of goods sold and ending inventory, assuming that Cortez uses a. FIFO. Cost of Goods Sold Ending Inventory b. LIFO. Cost of Goods Sold Ending Inventory c. Weighted average.
Business
1 answer:
patriot [66]3 years ago
7 0

Answer:

a. FIFO COGS $ 17640

a. FIFO Ending Inventory $ 12960  

b. LIFO  COGS $ 19160

b. LIFO ending Inventory $ 11440

c. Weighted COGS   $ 18360

c.Weighted Ending Inventory $12240

Explanation:

Cortez Company

Particulars                    Units       unit Cost           Total Cost

Opening Inventory       100              $ 60              $ 6000

Purchases                     150               $ 68             10200

<u>Batch 2                          200              $ 72              $ 14400</u>

<u>Total                           450                                        $30600    </u>

FIFO means first units received will be sold out first and the ending inventory consists of last units.

Sales = 270 units

a. FIFO COGS $ 17640

100   units at   $ 60 =  $ 6000

150  units at   $ 68 = 10200

20  units at $ 72 = $1440

a. FIFO Ending Inventory $ 12960  

180  units at $ 72  =$ 12960  

LIFO means last units received will be sold out first and the ending inventory consists of first units.

b. LIFO  COGS $ 19160

200 units at $ 72 = $ 14400

70 units at $ 68  = 4760

b. LIFO ending Inventory $ 11440

100  units at  $ 60= $ 6000

80   units at   $ 68 = 5440

c. Weighted Average Cost = Total Cost/ No of units = $30600  /450= $ 68

c. Weighted COGS = 270 units at $ 68=  $ 18360

c. Weighted Ending Inventory= (Total Units - Sales) CP per unit

= (450- 270)* 68

= 180 *68= $12240

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Add: Direct Labor                                                $300,000

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Manufacturing cost                                             <u>$661,000</u>

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Manufacturing cost                                             $661,000

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Cost of Goods Sold                                            <u>$653,000</u>

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Over applied manufacturing overhead = $5,000

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