Cortez Company sells chairs that are used at computer stations. Its beginning inventory of chairs was 100 units at $45 per unit. During the year, Cortez made two batch purchases of this chair. The first was a 174-unit purchase at $51 per unit; the second was a 212-unit purchase at $54 per unit. During the period, it sold 294 chairs.

Required

Determine the amount of product costs that would be allocated to cost of goods sold and ending

inventory, assuming that Cortez uses

Question

Business

Skye Meadows

4 September, 22:10

Cortez Company sells chairs that are used at computer stations. Its beginning inventory of chairs was 100 units at $45 per unit. During the year, Cortez made two batch purchases of this chair. The first was a 174-unit purchase at $51 per unit; the second was a 212-unit purchase at $54 per unit. During the period, it sold 294 chairs.

Required

Determine the amount of product costs that would be allocated to cost of goods sold and ending

inventory, assuming that Cortez uses

+5

Answers (1)

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Hailie Spence · Answer 1

Instructions are listed below.

Explanation:

Giving the following information:

Its beginning inventory of chairs was 100 units at $45 per unit.

Purchases:

The first was a 174-unit purchase at $51 per unit

The second was a 212-unit purchase at $54 per unit.

During the period, it sold 294 chairs.

I will calculate the cost of goods sold and ending inventory under FIFO, LIFO, and weighted-average methods.

FIFO (first-in, first-out):

COGS = 100*45 + 174*51 + 20*54 = $14,454

Ending inventory = 192*54 = $10,368

LIFO (last-in, first-out):

COGS = 212*54 + 82*51 = $15,630

Ending inventory = 92*51 + 100*45 = $9,192

Weighted-average method:

Weighted-average cost = (45 + 51 + 54) / 3 = $50

COGS = 294*50 = $14,700

Ending inventory = 192*50 = $9,600