Question

Exercise 5-18 Allocating product cost between cost of goods sold and ending inventory: Multiple purchases LO 5-6 Cortez Company sells chairs that are used at computer stations. Its beginning inventory of chairs was 180 units at $43 per unit. During the year, Cortez made two batch purchases of this chair. The first was a 260-unit purchase at $48 per unit; the second was a 390-unit purchase at $50 per unit. During the period, it sold 490 chairs. Required Determine the amount of product costs that would be allocated to cost of goods sold and ending inventory, assuming that Cortez uses FIFO. LIFO. Weighted average. (Do not round intermediate calculations. Round your final answers to nearest whole dollar amount.)

Answer 1

To allocate product costs between cost of goods sold and ending inventory using FIFO, LIFO, and weighted average methods, follow these steps.

Step-by-step explanation:

In order to determine the amount of product costs allocated to cost of goods sold and ending inventory, we need to use the FIFO, LIFO, and weighted average methods.

FIFO method:

1. Calculate the cost of goods sold by multiplying the units sold by their corresponding costs in the order of the purchases.
2. Calculate the ending inventory by multiplying the remaining units by their corresponding costs in the order of the purchases.

LIFO method:

1. Calculate the cost of goods sold by multiplying the units sold by their corresponding costs in the reverse order of the purchases.
2. Calculate the ending inventory by multiplying the remaining units by their corresponding costs in the reverse order of the purchases.

Weighted average method:

1. Calculate the total cost of goods available for sale by multiplying the quantities and costs of all purchases.
2. Divide the total cost of goods available for sale by the total quantity available to calculate the weighted average cost per unit.
3. Calculate the cost of goods sold by multiplying the units sold by the weighted average cost per unit.
4. Calculate the ending inventory by multiplying the remaining units by the weighted average cost per unit.