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Lilit [14]
3 years ago
14

The units of an item available for sale during the year were as follows: Jan. 1 Inventory 30 units at $110 Mar. 10 Purchase 60 u

nits at $120 Aug. 30 Purchase 10 units at $124 Dec. 12 Purchase 100 units at $128 There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the ending inventory cost and the cost of goods sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar. Cost of Inventory and Cost of Goods Sold :
Inventory Method Ending Inventory Cost of Goods Sold
First-in, first-out (FIFO) $ $
Last-in, first-out (LIFO)
Weighted average cost
Business
1 answer:
vova2212 [387]3 years ago
7 0

Answer:

Concept/Method       W-A          FIFO        LIFO

Ending Inventory   $  14,280     10,240       9,300

COGS                     $  21,420     25,460    26,400

Explanation:

First, we calcualte the goods available for sale through the year:

Jan. 1    Inventory 30 units at $110   =   3,300

Mar. 10  Purchase 60 units at $120 =    7,200

Aug. 30  Purchase 10 units at $124 =  12,400

Dec. 12 Purchase<u> 100 units</u> at $128 =  <u>12,800</u>

Goods Available:  200 units  Cost:       35,700

<u>Weighted average:</u>

we divide the cost of goods available over the units :

35,700 / 200 = 178.5

Then we multiply for COGS and EI

120 units x  $ 178.5 = $  21,420 COGS

 80 units x $ 178.5 = $   14,280 Ending Inventory

<u>FIFO</u>

The first untis(oldest) are COGS and the last are inventory.

we determinate the ending inventory from the last row:

Dec. 12 Purchase<u> 100 units</u> at $128 =  <u>12,800</u>

On ending inventory there is 80 units so:

80 units x 128 = 10,240

Then COGS will be the diffrence between cost of good available and ending inventory:

35,700 - 10,240 = 25,460

<u>LIFO</u>

the last units (newest) are COGS and the first are inventory

we determinate the ending inventory from the first row:

Jan. 1    Inventory <u>30 units </u>at $110   =   3,300

Ending invenotory 80 units - 30 units = 50 more units

we "grab" one more row:

Mar. 10  Purchase 60 units at $120 =    7,200

from we he need 50 units at 120

so ending inventory is:

30 units at $  110   =  3,300

50 units at $ 120    = 6,000

        Total                   9,300

Then, COGS is calculated by dfference like FIFO:

35,700 availalbe goods - 9,300 ending inventory = 26,400

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The question is incomplete. Here is the complete question:

The following annual returns for Stock E are projected over the next year for three possible states of the economy. What is the stock’s expected return and standard deviation of returns? E(R) = 8.5% ; σ = 22.70%; mean = $7.50; standard deviation = $2.50

State              Prob     E(R)

Boom             10%     40%

Normal           60%     20%

Recession       30%   - 25%

Answer:

The expected return of the stock E(R) is 8.5%.

The standard deviation of the returns is 22.7%

Explanation:

<u>Expected return</u>

The expected return of the stock can be calculated by multiplying the stock's expected return E(R) in each state of economy by the probability of that state.

The expected return E(R) = (0.4 * 0.1)  +  (0.2 * 0.6)  +  (-0.25 * 0.3)

The expected return E(R) = 0.04 + 0.12 -0.075 = 0.085 or 8.5%

<u>Standard Deviation of returns</u>

The standard deviation is a measure of total risk. It measures the volatility of the stock's expected return. The standard deviation (SD) of a stock's return can be calculated by using the following formula:

SD = √(rA - E(R))² * (pA) + (rB - E(R))² * (pB) + ... + (rN - E(R))² * (pN)

Where,

  • rA, rB to rN is the return under event A, B to N.
  • pA, pB to pN is the probability of these events to occur
  • E(R) is the expected return of the stock

Here, the events are the state of economy.

So, SD = √(0.4 - 0.085)² * (0.1) + (0.2 - 0.085)² * (0.6) + (-0.25 - 0.085)² * (0.3)

SD = 0.22699 or 22.699% rounded off to 22.70%

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  2. It saves cost ; cost of running advert for so many goods and services will be reduced because you already know your target customers you only advertise what they needed with little money and more result.
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