Question

Problem 8-06 Ehlo Company is a multiproduct firm. Presented below is information concerning one of its products, the Hawkeye. Date Transaction Quantity Price/Cost 1/1 Beginning inventory 1,000 $12 2/4 Purchase 2,000 18 2/20 Sale 2,500 30 4/2 Purchase 3,000 23 11/4 Sale 2,200 33 Correct answer. Your answer is correct. Calculate average-cost per unit. (Round answer to 4 decimal places, e.g. 2.7613.) Average-cost per unit $Entry field with correct answer 19.5 SHOW SOLUTION LINK TO TEXT Correct answer. Your answer is correct. Compute cost of goods sold, assuming Ehlo uses: (Round average cost per unit to 4 decimal places, e.g. 2.7631 and final answers to 0 decimal places, e.g. 6,548.) Cost of goods sold (a) Periodic system, FIFO cost flow $Entry field with correct answer 87100 (b) Perpetual system, FIFO cost flow $Entry field with correct answer 87100 (c) Periodic system, LIFO cost flow $Entry field with correct answer 99600 (d) Perpetual system, LIFO cost flow $Entry field with correct answer 92600 (e) Periodic system, weighted-average cost flow $Entry field with correct answer 91650 (f) Perpetual system, moving-average cost flow $Entry field with correct answer 88400 Click if you would like to Show Work for this question: Open Show Work

Answer 1

Answer:

Average-cost per unit $19.50

Cost of goods sold

(a) Periodic system, FIFO cost flow

• $87,100

(b) Perpetual system, FIFO cost flow

• $87,100

(c) Periodic system, LIFO cost flow

• $99,600

(d) Perpetual system, LIFO cost flow

• $92,600

(e) Periodic system, weighted-average cost flow

• $91,650

(f) Perpetual system, moving-average cost flow

• $88,400

Explanation:

Date     Transaction                   Quantity          Price/Cost

1/1          Beginning inventory      1,000                 $12

2/4        Purchase                       2,000                 $18

2/20      Sale                               2,500                $30

4/2        Purchase                       3,000                $23

11/4        Sale                               2,200                $33

total                                             1,300

Date     Transaction                   Quantity          Price/Cost

1/1          Beginning inventory      1,000                 $12

2/4        Purchase                       2,000                 $18

4/2        Purchase                       3,000                $23

total                                             6,000             $19.50

using periodic inventory system:

Date     Transaction                   Quantity          Price/Cost

1/1          Beginning inventory      1,000                 $12

2/4        Purchase                       2,000                 $18

4/2        Purchase                       3,000                $23

total                                             1,300

COGS under FIFO = (1,000 x $12) + (2,000 x $18) + (1,700 x $23) = $87,100

COGS under LIFO = (3,000 x $23) + (1,700 x $18) = $99,600

COGS under weighted average = 4,700 x $19.50 = $91,650

using perpetual inventory system:

Date     Transaction                   Quantity          Price/Cost

1/1          Beginning inventory      1,000                 $12

2/4        Purchase                       2,000                 $18

2/20      Sale                               2,500                $30

4/2        Purchase                       3,000                $23

11/4        Sale                               2,200                $33

COGS under FIFO = (1,000 x $12) + (1,500 x $18) + (500 x $18) + (1,700 x $23) = $87,100

COGS under LIFO = (2,000 x $18) + (500 x $12) + (2,200 x $23) = $92,600

COGS under weighted average = (2,500 x $16) + (2,200 x $22) = $88,400