Answer:
Bridgeport Corp.
a. Weighted-average cost:
Weighted average cost = Cost of goods available for sale = $9,287
b. Ending inventory, cost of goods sold, gross profit under:
1. LIFO:
a) Ending Inventory = 75 units
Oct. 1 Beginning inventory 60 at $24 = $1,440
Oct. 9 Purchase 15 at $26 = 390
Total 75 = $1,830
b) Cost of goods sold = Cost of goods available for sale minus the ending inventory
= $9,287 - $1,830
= $7,457
c) Gross profit = Sales minus Cost of goods sold
= $11,015 - $7,457
= $3,558
2. FIFO:
a) Ending Inventory = 75 units
Oct. 17 Purchase 4 at $27 = $108
Oct. 25 Purchase 71 at $29 = 2,059
Ending Inventory 75 $2,167
b) Cost of goods sold = Cost of goods available for minus Ending Inventory
= $9,287 - $2,167
= $7,120
c) Gross profit = Sales minus Cost of goods sold
= $11,015 - $7,120
= $3,895
3. Average Cost:
a) Ending Inventory = 75 units
= Ending Inventory units x Weighted-Average cost
= 75 x $26.53 = $1,989.75
b) Cost of goods sold = units sold x weighted-average cost
= 275 x $26.53
= $7,295.75
c) Gross profit = Sales minus Cost of goods sold
= $11,015 - $7,295.75
= $3,719.25
Explanation:
a) Data and calculations:
Date Description Units Unit Cost Selling Price Total
Oct. 1 Beginning inventory 60 $24 $1,440
Oct. 9 Purchase 125 26 3,250
Oct. 11 Sale (107) $37 $3,959
Oct. 17 Purchase 94 27 2,538
Oct. 22 Sale (64) 42 2,688
Oct. 25 Purchase 71 29 2,059
Oct. 29 Sale (104) 42 4,368
Total 350 (275) $9,287 $11,015
Ending inventory in units = 350 - 275 = 75
Weighted average cost = $9,287
Weighted average cost per unit = $9,287/350 = $26.53
b) The LIFO is the Last-in, First-Out method of inventory costing which assumes that units bought last are the units to be sold first.
c) FIFO means the First-in, First-Out method of inventory costing. This takes the assumption that units bought first are the units to be sold first in that chronological order.
d) Weighted average method of inventory costing takes the weighted average cost and uses this to value the ending inventory and the cost of goods sold.
e) The periodic inventory system does not alter the value of inventory until at the end of the accounting period when the inventory count is done, reconciled, and valued.
