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Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

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BuyFindarrow_forward

Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

When the buyer for Southern Distributors (Exercise 1) took physical inventory on December 31, 48 washing machines remained in inventory.

Calculate the dollar value of the 48 washing machines by using FIFO.

Calculate the dollar value of the 48 washing machines by using LIFO.

Calculate the dollar value of the 48 washing machines by using the average cost method.

(a)

To determine

To calculate: The dollar value of the 48 washing machines with the help of the FIFO method of inventory pricing for Southern Distributors.

DateUnitPurchasedCost per UnitTotalCostBeginning Inventory, March 124$525___Purchase, May2012479___Purchase, August 1618540___Purchase, November 827488___Washing Machines Avalable for sale___cost of goods Available for sale___

UnitsCost/Unit27488183540479

Explanation

Given Information:

It is given that when the buyer took a physical inventory of the washing machines on December 31, 48 units remained in the inventory.

The information of the inventory is given as follows in the table-

UnitsCost/Unit27488183540479

Formula used:

Use the following steps for FIFO method of inventory pricing-

Step1. Write the list of the number of units on hand at the end of the year and their corresponding costs starting with the ending balance and then work backward through the income shipments.

Step2. Multiply the number of units by the corresponding cost per units for each purchase.

Step3. Calculate the value of ending inventory by totaling the extension from step 2.

Calculation:

To calculate the dollar value of ending inventory by using FIFO.

List the ending inventory with cost in reverse order of acquisition.

And multiply the units with per unit cost

3×479=1,43718×540=9,72027×488=13,176

(b)

To determine

To calculate: The dollar value of 48 washing machines with the help of the LIFO method of inventory pricing.

UnitsCost/Unit24$5251212479540

(c)

To determine

To calculate: The dollar value of 48 washing machines with the help of the average cost method.

The table is given as follows:

DateUnitPurchasedCost per UnitTotalCostBeginning Inventory, March124$525___Purchase, May2012479___Purchase, August 1618540___Purchase, November 827488___Washing Machines Avalable for sale___cost of goods Available for sale___

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