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CONTINUING PROBLEM: FRONT ROW ENTERTAINMENT
In addition to developing online fan communities, Cam and Anna believe that they could increase Front Row Entertainment’s revenue by selling live-performance DVDs at the concert.
Front Row records the following activity between May and August 2019 for one of its artists:
Front Row sells all of its DVDs for $15 each and uses a perpetual inventory system. Required:
Required:
Compute ending inventory and cost of goods sold using the FIFO, LIFO, and average cost methods. ( Note: Use four decimal places for per-unit calculations and round all other numbers to the nearest penny.)
Introduction:
The first in, first out (FIFO) method of inventory valuation is a cost stream supposition that the first products obtained are likewise the first merchandise sold. In many organizations, this presumption intently coordinates the genuine stream of merchandise, as is viewed as the most hypothetically right inventory valuation method.
The average cost method is an inventory costing method in which the cost of every thing in an inventory is determined on the basis of the average cost of every comparative great in the inventory. The average cost method is determined by partitioning the cost of products in inventory by the absolute number of things accessible available to be purchased.
To choose:
Compute ending inventory and cost of goods sold using the FIFO, LIFO and average cost method.
Under the FIFO method
| Date | Activity | Units | Rate (cost) | Total |
| 10 may | Sale | 180 | 8.25 | 1485 |
| 12 june | Sale | 60 90 |
8.25 8.75 |
495 787.5 |
| 5 July | Sale | 135 | 8.75 | 1181.25 |
| 20 Aug | Sale | 75 35 |
8.75 9.25 |
656.25 323.75 |
| Total | 4928.75 |
Cost of goods sold = $4928.75
Ending inventory = 155
Under the LIFO method
| Date | Activity | Units | Rate (cost) | Total |
| 10 may | Sale | 180 | 8.25 | 1485 |
| 12 june | Sale | 150 | 8.75 | 1312.5 |
| 5 July | Sale | 135 | 8.75 | 1181.25 |
| 20 Aug | Sale | 110 | 9.25 | 1017.5 |
| Total | 4996 |
Chapter 6 Solutions
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