Given the Following Information About Purchases and Sales During the Year,compute

question 128

Essay

Given the following information about purchases and sales during the year,compute the cost to be assigned to ending inventory under each of three methods: (a)average-cost,(b)FIFO,and (c)LIFO.Assume the periodic inventory system is used.(Show your work.)
$$\begin{array} { l c l l r } \text { Jan. } & 1 & \text { Beginning inventory } & 100 \text { items @ } \$ 4 = & 400 \\\text { July } & 1 & \text { Purchases } & \underline { 300 } \text { items } @ \$ 8 = & 2,400 \\& & \text { Totals } & 400 \text { items } & \$2,800\\& & \text { Total sales } & \underline { 240 } \text { items } & \\\text { Dec. } & 31 & \text { Ending inventary } & \underline { 160 } \text { items } &\end{array}$$

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Definitions:

Incremental Manufacturing Cost

The additional cost incurred by producing one more unit of a product, often considered in decision-making and pricing.

Relevant Range

The span of activity or production volume over which fixed and variable costs remain constant on a per-unit basis.

Direct Costs

Direct costs are expenses that can be directly attributed to the production of specific goods or services, such as raw materials and labor.

Merchandising Company

A business that purchases finished goods for resale, aiming to make a profit without changing the form of the goods.