a. To calculate the ending inventory cost using the FIFO method, we assume that the first units purchased are the first ones sold and the ending inventory consists of the most recently purchased units. So, we need to allocate the cost of the beginning inventory and the first purchase to the units sold, and the cost of the second purchase to the ending inventory.
The cost of goods sold (COGS) under FIFO can be calculated as follows:
COGS = (5,300 units × $180) + (7,700 units × $185) + (6,000 units × $192) = $2,396,500
The cost of the ending inventory under FIFO is the cost of the remaining 6,800 units, which is:
Ending inventory cost = 6,800 units × $192 = $1,305,600
Therefore, the total cost of the ending inventory according to FIFO is $1,305,600.
b. To calculate the ending inventory cost using the LIFO method, we assume that the most recently purchased units are the first ones sold and the ending inventory consists of the oldest units available. So, we need to allocate the cost of the most recent purchase and the beginning inventory to the units sold, and the cost of the first purchase to the ending inventory.
The cost of goods sold (COGS) under LIFO can be calculated as follows:
COGS = (14,000 units × $192) + (1,000 units × $185) + (4,300 units × $180) = $2,730,500
The cost of the ending inventory under LIFO is the cost of the remaining 6,800 units, which is:
Ending inventory cost = 6,800 units × $185 = $1,258,000
Therefore, the total cost of the ending inventory according to LIFO is $1,258,000.