Question

Larkspur, Inc. uses a perpetual inventory system. Data for product E2-D2 include the purchases shown below.Date Numer of Units Unit priceMay 7 46 $10July 28 36 15On June 1, Larkspur, Inc. sold 23 units, and on August 27, 36 more units. Calculate the average cost of the goods sold in the sale. (Round answers to 3 decimal places, e.g. 5.125.)

Answer 1

Answer:

Following are the solution to this question:

Explanation:

Calculating the cost of the product sold:

FIFO:

June 1:  23 units costing of $\ 10$ each $= \ 230$

Aug 27: 23 units costing of $\ 10$ each $= 230$

             13 units costing of $\ 15$ each $= 195$

                                                                $\ 425$

Total cost of product sold$= \ 655$

LIFO:

June 1:  23 units costing of $\ 10$ each $= \ 230$

Aug 27:  36 units costing of $\ 15$ each = 540

                   Total cost of product sold $= \ 770$

Average cost:

June 1:  23 units costing of $\ 10$ each $= \ 230$

Aug 27:  36 units costing of $\ 13.051$ each $= \ 469.836$

                  Total cost of product sold $= \ 699.836$