Question

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

Required

3. 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

FIFO	$88,800
LIFO	$62,500
Weighted Average	$73,323.50
Specific Identification	$74,500

Step-by-step solution

Definition of Average Cost

The average cost can be defined as the cost calculated by dividing the cost incurred in the production by the units generated from the production process.

Calculation of ending inventory

(a) FIFO

Particular	Unit	X	Per unit cost	=	Total cost
May 25	100	X	458	=	45,800
May 17	80	X	450	=	36,000
May 6	20	X	350	=	7,000
Total	$88,800

(b) LIFO

Particular	Unit	X	Per unit cost	=	Total cost
Beginning inventory	150	X	300	=	45,000
May 6	50	X	350	=	17,500
Total	$62,500

(c) Weighted Average method

$$\begin{gathered} \mathit{E}\mathit{n}\mathit{d}\mathit{i}\mathit{n}\mathit{g}\mathit{I}\mathit{n}\mathit{v}\mathit{e}\mathit{n}\mathit{t}\mathit{o}\mathit{r}\mathit{y}\mathbf{=}\frac{\mathbf{C}\mathbf{o}\mathbf{s}\mathbf{t}\mathbf{o}\mathbf{f}\mathbf{g}\mathbf{o}\mathbf{o}\mathbf{d}\mathbf{s}\mathbf{a}\mathbf{v}\mathbf{a}\mathbf{i}\mathbf{l}\mathbf{a}\mathbf{b}\mathbf{l}\mathbf{e}\mathbf{f}\mathbf{o}\mathbf{r}\mathbf{s}\mathbf{a}\mathbf{l}\mathbf{e}}{\mathbf{U}\mathbf{n}\mathbf{i}\mathbf{t}\mathbf{s}\mathbf{a}\mathbf{v}\mathbf{a}\mathbf{i}\mathbf{l}\mathbf{a}\mathbf{b}\mathbf{l}\mathbf{e}\mathbf{f}\mathbf{o}\mathbf{r}\mathbf{s}\mathbf{a}\mathbf{l}\mathbf{e}}\mathbf{\times }\mathit{U}\mathit{n}\mathit{i}\mathit{t}\mathit{s}\mathit{i}\mathit{n}\mathit{e}\mathit{n}\mathit{d}\mathit{i}\mathit{n}\mathit{g}\mathit{i}\mathit{n}\mathit{v}\mathit{e}\mathit{n}\mathit{t}\mathit{o}\mathit{r}\mathit{y} \\ \mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{=}\frac{\mathbf{\$}\mathbf{249}\mathbf{,}\mathbf{300}}{\mathbf{680}}\mathbf{\times }\mathbf{200} \\ \mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{}\mathbf{=}\mathbf{73}\mathbf{,}\mathbf{323}\mathbf{.}\mathbf{50} \end{gathered}$$

(d) Specific Identification

Particulars	Units	X	Per unit	=	Total cost
Beginning inventory	70	X	300	=	21,000
May 6	50	X	350	=	17,500
May 17	80	X	450	=	36,000
Total	200				$74,500