Answer:
a. $26,400
b. $20,520
c. $24,140.64
Explanation:
a. The computation of inventory cost by the first-in, first-out method is shown below:-
Inventory cost under first-in, first-out method = Number of units × Unit cost of 3rd purchase
= 48 × $550
= $26,400
b. The computation of inventory cost by the last-in, first-out method is shown below:-
Inventory cost by Last in first out method = (Jan 1 units × Jan 1 Inventory per unit) + (Number of units - Jan 1 units) × Feb. 19 Inventory per unit
= (26 × $400) + (48 - 26) × $460
= $10,400 + $10,120
= $20,520
c. The computation of inventory cost by the average cost method is shown below:-
Average cost per unit = (26 × $400) + (57 × $460) + (62 × $540) + (60 × $550)
= $10,400 + $26,220 + $33,480 + $33,000
= $103,100
Per unit cost = Inventory cost ÷ Total number of units
= $103,100 ÷ (26 + 57 + 62 + 60)
= $103,100 ÷ 205
= $502.93
Inventory cost under average cost method = Per unit cost × Number of units
= 48 × $502.93
= $24,140.64
Therefore we have applied the formulas.
