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1 April, 15:17

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

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  1. 1 April, 18:22
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    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
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