Question

Skysong, Inc. began the year with 9 units of marine floats at a cost of $12 each. During the year, it made the following purchases: May 5, 28 unit at $16; July 16, 19 units at $20; and December 7, 24 units at $24. Assume there are 30 units on hand at the end of the period. Skysong uses the periodic approach.
a. Determine the cost of goods sold under FIFO
b. Determine the cost of goods sold under LIFO
c. Calculate average unit cost
d. Determine the cost of goods sold under average-cost. Average-Cost Cost of good sold

Answer 1

Answer:

Skysong, Inc.

a. The cost of goods sold under FIFO

= $816

b. The cost of goods sold under LIFO

= $1,068

c. Average unit cost

= $18.90

d. The cost of goods sold under average-cost

= $945

Explanation:

a) Data and Calculations:

Date    Transaction                 Units   Unit Cost    Total

Jan. 1   Beginning inventory      9            $12        $108

May 5, Purchases                    28            $16         448

July 16 Purchases                    19            $20        380

Dec. 7, Purchases                   24            $24        576

Dec. 31 Total                           80                        $1,512

Dec. 31 Ending inventory       30

Dec. 31 Sales                          50

a. The cost of goods sold under FIFO:

Jan. 1   Beginning inventory      9            $12        $108

May 5, Purchases                    28            $16         448

July 16 Purchases                    13            $20        260

Cost of goods sold                                               $816

b. The cost of goods sold under LIFO:

May 5, Purchases                      7            $16          112

July 16 Purchases                    19            $20        380

Dec. 7, Purchases                   24            $24        576

Cost of goods sold                                           $1,068

c. Average unit cost:

= Total cost/Total units

= $18.9 ($1,512/80)

d. The cost of goods sold under average-cost:

= $945 (50 * $18.90)