Under LIFO, ending inventory is $300 less than it is under
FIFO, or $3,200.
Requirement 3:
Average cost
Beginning inventory
300
@ $16
$4,800
Purchase January 14
150
@ $17
2,550
Purchase January 29
100
@ $18
1,800
Units available
550
$9,150
Average cost per unit = $9,150 ÷ 550 units = $16.636
Ending inventory = 200 units @ $16.636 = $
3,327
Cost of goods sold = 350 units @ $16.636 = $5,823
E9-8.
Computing inventory under three flow assumptions
(AICPA adapted)
Purchases during 2011 were:
1,500
@
$10.00
=
$15,000
1,200
@
10.50
=
12,600
600
@
11.00
=
6,600
900
@
11.50
=
10,350
4,200
$44,550
To find ending inventory under each of these methods, we
need to compute how many units have been sold. To find this
number, we can sum the purchases (4,200 units) and
beginning inventory (800 units) to find the units available for
sale (5,000). Next, we subtract the units on hand (1,600) from
the units available. This figure (3,400) is the number of units
that have been sold. Now that we know the number of units
sold, we can compute the cost of goods sold under each
method.
Requirement 1: