Question

Refer to the information in Problem 5-3A and assume the periodic inventory system is used.

Required

Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. (Round all amounts to cents.)

Short answer

Method	Ending Inventory
FIFO	$18,400
LIFO	$18,000
Weighted Average	$17,156
Specific Identification	$18,200

Step-by-step solution

Definition of Cost Allocation

The process under which the cost incurred by the business entity is allocated to the objects, process, or product is known as cost allocation.

Determination of Ending Inventory

(a) FIFO

Particular	Units	X	Per unit cost	=	Total cost
Sep 5	400	X	46	=	$18,400
Total	$18,400

(b) LIFO

Particular	Units	X	Per unit cost	=	Total cost
Beginning Inventory	400	X	45	=	$18,000
Total	$18,000

(c) Weighted Average

$\begin{array}{rcl}\mathrm{Ending}\mathrm{inventory}& =& \frac{\mathrm{Total}\mathrm{cost}\mathrm{of}\mathrm{goods}\mathrm{available}\mathrm{for}\mathrm{sale}}{\mathrm{Total}\mathrm{units}\mathrm{available}\mathrm{for}\mathrm{sale}}\times \mathrm{Units}\mathrm{in}\mathrm{ending}\mathrm{inventory}\\ & =& \frac{\$77,200}{1,800}\times 400\\ & =& \$17,156\end{array}$

(d) Specific Identification

Particular	Units	X	Per unit cost	=	Total cost
10 February	100	X	42	=	4,200
21 August	50	X	50	=	2,500
5 September	250	X	46	=	11,500
Total	$18,200