Final answer:
The cost of goods sold and the cost of ending inventory can be calculated using the FIFO method, which uses the oldest inventory costs, or the Weighted Average Cost method, which averages all costs. Four decimal places should be used for per-unit calculations, and all other numbers rounded to the nearest dollar for accuracy.
Step-by-step explanation:
To calculate the cost of goods sold (COGS) and the cost of ending inventory, you can use two common methods: the First-In, First-Out (FIFO) method and the Weighted Average Cost method. Each method has a different approach to inventory valuation, which affects the COGS and ending inventory value. The FIFO method assumes that the oldest inventory items are sold first. Therefore, the COGS is calculated based on the prices of the earliest goods purchased or produced, while the ending inventory is based on the prices of the most recent purchases. The Weighted Average Cost method calculates the COGS and ending inventory by taking the average cost of all items available for sale during the period and assigning that cost to both COGS and items in ending inventory. The average cost is found by dividing the total cost of goods available for sale by the total quantity available for sale. This method tends to smooth out price fluctuations over the period. Remember to use four decimal places for per-unit calculations when employing these methods and round all other numbers to the nearest whole dollar to maintain accuracy in your financial statements.