Answer:
Sunnyside Marine Products
Determination of the Cost of Goods Sold under:
a) FIIFO:
= $780
(b) LIFO:
= $985
(c) Average-cost:
= $890
Explanation:
a) Data and Calculations:
Date Description Units Unit cost Total
January 1 Beginning Inventory 10 $11 $110
May 5, Purchase 30 $16 480
July 16 Purchase 15 $19 285
Dec. 7 Purchase 20 $23 460
Dec. 31 Ending Inventory 25
Dec. 31 Total Units Sold 50 $1,335
Average Cost = Total cost/Total inventory available
= $1,335/75
=$17.80
FIFO:Cost of goods sold = (10 * $11) + (30 * 16) + (10 * 19) = $780
LIFO: Cost of goods sold = (20 * $23) + (15 * $19) + (15 * 16)= $985
Average-Cost: Cost of goods sold = 50 * $17.80
b) Average-cost uses the average cost of goods available for sale divided by the total units available for sale under the periodic inventory system.
FIFO is based on the assumption that the first goods sold are the ones bought first. LIFO assumes that the first goods sold are the last ones bought.