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Periodic Inventory Using FIFO, LIFO, and Weighted Average Cost Method. The units of an item available for sale during the year were as follows: Jan. 1 Inventory 9 units at $47 $423 Aug. 13 Purchase 19 units at $50 950 Nov. 30 Purchase 13 units at $51 663 Available for sale 41 units $2,036 There are 16 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average cost method (round per-unit cost to two decimal places and your final answer to the nearest whole dollar). a. First-in, first-out (FIFO) $ b. Last-in, first-out (LIFO) $ c. Weighted average cost $

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Answer:

a. First-in, first-out (FIFO) $816

b. Last-in, first-out (LIFO) $773

c. Weighted average cost $795

Explanation:

FIFO

FIFO assumes that the first goods received by the business will be the first ones to be delivered to the final customer.

Inventory Cost = Units left × Earliest Price

                        = 16 units × $51

                        = $816

LIFO

LIFO assumes that the last goods purchased are the first ones to be issued to the final customer

Inventory : 7 units × $50 =  $350

                  9 units × $47 =  $423

                 total                =  $773

Weighted Average Method.

The Average cost of goods held is recalculated each time as the new delivery of goods is received. Issues are then priced out at this weighted average cost.

First Calculate the Average Price.

Average Price = Total Cost / Total Units

                        = ($423 + $950 + $663) / 41 units

                        =  $49.66

Inventory Cost = Units left × Average Price

                         = 16 units × $49.66

                         = $794.56 or $795

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