1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
ExtremeBDS [4]
3 years ago
10

At the beginning of the current period, Chen carried 1,000 units of its product with a unit cost of $10. A summary of purchases

during the current period follows. During the period, Chen sold 2,800 units.
Units Unit Cost Cost
Beginning Inventory 1,000 $10 $10,000
Purchase #1 1,800 11 19,800
Purchase #2 800 13 10,400
Purchase #3 1,200 15 18,000

a. Assume that Chen uses the first-in, first-out method. Compute both cost of good sold for the current period and the ending inventory balance.
b. Assume that Chen uses the average cost method. Compute both cost of good sold for the current period and the ending inventory balance.
Business
2 answers:
jeka943 years ago
6 0

Answer:

a. Cost of Goods Sold under FIFO method - $ 29.800

   Ending inventory under FIFO method -     $ 28,400

b. Cost of Goods Sold under average cost method - $ 33,950

   Ending inventory under average cost method -     $ 24,250

Explanation:

                                                              Units     Unit Cost              Cost

Beginning Inventory                           1,000          $10               $10,000

Purchase #1                                          1,800         $ 11               $ 19,800

Purchase #2                                           800         $ 13              $ 10,400

Purchase #3                                         <u>1,200</u>         $ 15              <u>$ 18,000</u>          

Total available                                    4,800                            $ 58,200      

Units sold                                            ( 2,800)

Ending Inventory                                   2,000

Computations under FIFO method

In the FIFO method of cost flows, the cost of goods sold are considered from the opening inventory and the earlier purchases. The ending inventory is from the later purchases.

Cost of goods sold

Units sold                                            2,800

Opening inventory                             1,000 units @ $ 10          $ 10,000

Purchase # 1                                        1,800 units @ $ 11           <u>$ 19,800</u>

Total cost of Goods sold                                                           $ 29,800          

Ending Inventory

Units on hand                                      2,000

Purchase #2                                           800         $ 13              $ 10,400

Purchase #3                                         <u>1,200</u>         $ 15              <u>$ 18,000</u>          

Ending Inventory                                                                         $ 28,400

Computations under Average Cost method

Under average cost method, the cost of goods sold and the ending inventory is valued at the average cost of the goods available for sale divided by the number of units.

The average cost is calculated by dividing the total cost by the available units

Total Cost                                                       $ 58,200

Units available                                                     4,800

Average cost per unit                                    $      12.13    

Cost of goods sold = Units sold * Average cost = 2,800 * $ 12.13 =  $ 33,950

Ending Inventory- Units in hand * Average Cost = 2,000 * $ 12.13=  $ 24,250  

vladimir1956 [14]3 years ago
4 0

Answer:

(a) The cost of goods sold is $29, 800

The cost of closing inventory is $28, 400

(b) Cost of goods sold = $11 x 2, 800

     = $30 ,800

Cost of closing inventory = 2, 000 x $11

    = $22, 000

Explanation:

Below is a table of the data provided in the question

                  Units           Unit Cost ($)            Cost ($)

Beginning   1, 000               10                     10, 000

Purchase #1   1, 800               11                     19, 800

Purchase #2    800               13                     10, 400

Purchase #3   1, 200               15                     18, 000

<u>(a) First-In, First-Out (FIFO) method: </u>

FIFO method is a method used for the calculation of the cost of goods sold. This method assumes that the oldest products in a company’s inventory are sold first. The cost paid for the oldest inventory is the one used to calculate the cost of goods sold.

<u>How to calculate the cost of goods sold: </u>

• determine the cost of your oldest goods sold

• multiply that amount by the number of units sold

Answer: (a)

Units sold 2, 800 Unit cost Cost  

Opening inventory 1, 000 $10 $10, 000  

Purchase #1 1, 800 $11 $19, 800  

2, 800  $29, 800  

The cost of goods sold is $29, 800

<u>Closing inventory: </u>

Purchase #2          800      13       10, 400

Purchase #3         1, 200      15      <u> 18, 000 </u>

<u>T</u>otal                                         <u>28, 400 </u>

The cost of closing inventory is $28, 400

<u>(b) Average Cost Method: </u>

The average cost assigns a cost to inventory based on the total cost of goods purchased in a period divided by the total number of units purchased. This method is also known as the weighted average cost method.

<u>How to calculate the cost of goods sold: </u>

• find the average cost (divide the cost of all goods purchased, including opening inventory, by the number of goods on hand.

• Multiply that amount by the number of units sold

Average cost calculation:

               Units           Unit Cost ($)            Cost ($)

Beginning 1, 000                  10                  10, 000

Purchase #1 1, 800                  11                  19, 800

Purchase #2 800                          13                  10, 400

Purchase #3 <u>1, 200</u>                  15                   <u>8, 000 </u>

Total        <u> 4, 800</u>                                   <u>52, 800 </u>

Average cost = $52, 800 / 4, 800

= $11

Therefore,  

Cost of goods sold = $11 x 2, 800

     = $30 ,800

Closing inventory units = 4, 800 – 2, 800

     = 2, 000 units

Cost of closing inventory = 2, 000 x $11

    = $22, 000

Download docx
You might be interested in
What was the result of developed countries extracting resources from their colonies?
saul85 [17]

Answer: D. There was a one-way flow of wealth favoring the colonizers.​

Explanation:

With the Colonists simply taking resources and not paying the colonies for it, there was a one way flow of wealth which favored them alone. Had the colonists paid for the goods and then processed them for resale (as developed countries do now), there would have been at least some sort of wealth flowing back to the colonies for the resources they possessed. The Colonists were essentially not paying for raw material inputs for production and simply reaped all the benefits after processing.

5 0
3 years ago
Read 2 more answers
Firms are institutions that organise​ _____ of goods and services.
Zinaida [17]

Answer:

The correct word for the blank space is: the production.

Explanation:

A firm is a business or organization that produces goods or services on a for-profit basis. While the term is typically related to law firms, it applies to an array of entities. For example, a firm can be a corporation which is a legal entity that is separate from its owners and enjoys the right to entering contracts, loan, and borrow money or conduct other business.

3 0
3 years ago
During the month of May, a company performed $2,400 of cash services and $3,300 of services on account. The journal entry at the
Tanya [424]

Answer:

Debit : Cash  $2,400

Debit : Account Receivables $3,300

Credit : Revenue $5,700

Explanation:

Revenue is recognized when a firm transfers the control of goods or services not when paid.

So this journal must both recognize the Assets in Cash and Assets in Trade Receivables since control for the services has already been transferred.

The journal entry at the end of the month to record this transaction would be :

Debit : Cash  $2,400

Debit : Account Receivables $3,300

Credit : Revenue $5,700

3 0
2 years ago
HELP!!! Marketing
Harrizon [31]

Answer:

1. ANSWER: 20,000

2. ANSWER: $400,000

3. ANSWER: $28.45

Explanation:

1. If the average price for a new disposable cell phone is $20, and the total market potential for that product is $4 million;and Topco, Inc. has a planned market share of 10 percent. Then, Topco have the potential to sell in this market 10% * $4 million / $20 = 20,000 units of the proposed cell phone.

2. The planned market share in dollars is 10% * $4 million = $400,000

3. If Atlantic Car Rental charges $29.95 per day to rent a mid-size automobile. Pacific Car Rental, Atlantic's main competitor, just reduced prices on all its car rentals. In response, Atlantic reduced its prices by 5 percent.

Now Atlantic's new cost of rental for mid-size cars is: 95% of $29.95 =  $28.45

5 0
3 years ago
Souza Inc, which produces and sells a single product, has provided its contribution format income statement for October. Sales (
Kipish [7]

Answer:

Net operating income is $300

Explanation:

We know that,

The net operating income = Sales - variable cost - fixed expenses

And, the contribution margin = Sales - variable cost

So, contribution margin - fixed expenses = Net operating income

Since we have to compute the net operating income for 3,500 units So, first we have to compute the contribution margin per unit which is shown below:

= Contribution margin ÷ number of units

= $48,000 ÷ 4,000 units

= $12

Now for 3,500 units, the contribution margin would be

= 3,500 units × $12

= $42,000

So, the net operating income would be

= $42,000 - $41,700

= $300

The fixed expenses would not be changes. It remains constant

5 0
3 years ago
Other questions:
  • As a manufacturer, lands' end purchases merchandise and materials from around the world. lands' end is a(n) _______. market lead
    6·2 answers
  • A higher interest rate (discount rate) would:________
    8·1 answer
  • Which of the following statements is NOT true regarding the importance of the role that an operations manager plays in addressin
    10·1 answer
  • Which of the following is TRUE of​ risk? A. Risk and return are inversely proportionate to each other. B. Riskier investments te
    11·1 answer
  • A few years ago the firm issued $4,000,000 debt with a coupon rate of 4%; currently that debt is trading with a yield to maturit
    7·1 answer
  • You start a new business selling a product thats the best of its kind on the market. In addition to this product, what must you
    9·1 answer
  • Imagine that David is preparing his will and is trying to decide how to divide his assets between his two grown children. His da
    12·1 answer
  • Your assignment for this unit is to create a proposal to garner support from partners in your family business. You are an up-and
    5·1 answer
  • 2. What should Parker have done during the sales presentation when Kitchel told him that he needed to think it over?
    15·1 answer
  • Which of the following is the best example of a service
    6·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!