Question

FIFO and LIFO Costs Under Perpetual Inventory System The following units of an item were available for sale during the year: Beginning inventory 41 units at $42 Sale 31 units at $63 First purchase 17 units at $45 Sale 13 units at $63 Second purchase 25 units at $47 Sale 13 units at $63 The firm uses the perpetual inventory system, and there are 26 units of the item on hand at the end of the year. a. What is the total cost of the ending inventory according to FIFO? $ b. What is the total cost of the ending inventory according to LIFO? $

Answer 1

Answer:

FIFO ending inventory cost: $1,220

LIFO ending inventory cost: $1,164

Explanation:

Beginning inventory 41 units at $42

Sale 31 units at $63

First purchase 17 units at $45

Sale 13 units at $63

Second purchase 25 units at $47

Sale 13 units at $63

End of the year: 26 units

FIFO ending inventory cost: 25 units x $47 + 1 unit x $45 = $1,220

LIFO ending inventory cost: 12 units x $47 + 4 units x $45 + 10 units x $42 = $1,164