Johnson Company Reports the Following for the Month of June

question 64

Essay

Johnson Company reports the following for the month of June. (a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO, (2) LIFO, and (3) average cost.
(b) Which costing method gives the highest ending inventory? The highest cost of goods sold? Why?
(c) How do the average-cost values for ending inventory and cost of goods sold relate to ending inventory and cost of goods sold for FIFO and LIFO?

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Definitions:

Consumer Surplus

The incongruity between the price consumers are willing to offer for a good or service versus the final cost.

Increase Supply

An upward shift in the supply curve, indicating more of a good or service is available for sale at any given price, usually the result of factors like improved technology or decreased production costs.

Consumer Surplus

Consumer surplus is the difference between the total amount that consumers are willing to pay for a good or service and the total amount they actually pay.

Soybeans

Edible legumes native to East Asia, widely grown for their numerous uses, which include producing oil, as a source of protein, and in many food products.