The units of an item available for sale during the year were as follows: Jan. 1 Inventory 2,500 units at $5 Feb. 17 Purchase 3,300 units at $6 July 21 Purchase 3,000 units at $7 Nov. 23 Purchase 1,200 units at $8 There are 1,500 units of the item in the physical inventory at December 31. The periodic inventory system is used.

a. Determine the inventory cost by the first-in, first-out method. $

b. Determine the inventory cost by the last-in, first-out method. $

c. Determine the inventory cost by the weighted average cost method. $

The answers are:

A) Using FIFO, the inventory cost is $11,700

B) Using LIFO, the inventory cost is $7,500

C) Using ACV, the inventory cost is $9,435

Explanation:

Date Units purchased Unit price Total purchase

Jan. 1 2,500 units $5 per unit $12,500

Feb. 17 3,300 units $6 per unit $19,800

July 21 3,000 units $7 per unit $21,000

Nov. 23 1,200 units $8 per unit $9,600

TOTAL 10,000 units $62,900

At December 31, 1,500 units were left in the physical inventory

Using FIFO, the inventory cost is $11,700 [ = (1,200 units x $8 per unit) + (300 units x $7 per unit) ] Using LIFO, the inventory cost is $7,500 ( = 1,500 units x $5 per unit) Using ACV, the inventory cost is $9,435 [ = ($62,900 / 10,000 units) x 1,500 units]