Question

Skysong, Inc. began the year with 9 units of marine floats at a cost of $12 each. During the year, it made the following purchases: May 5, 28 unit at $16; July 16, 19 units at $20; and December 7, 24 units at $24. Assume there are 30 units on hand at the end of the period. Skysong uses the periodic approach.

a. Determine the cost of goods sold under FIFO
b. Determine the cost of goods sold under LIFO
c. Calculate average unit cost
d. Determine the cost of goods sold under average-cost. Average-Cost Cost of good sold

Answer 1

Skysong, Inc.

a. The cost of goods sold under FIFO

= $816

b. The cost of goods sold under LIFO

= $1,068

c. Average unit cost

= $18.90

d. The cost of goods sold under average-cost

= $945

Step-by-step explanation:

a) Data and Calculations:

Date Transaction Units Unit Cost Total

Jan. 1 Beginning inventory 9 $12 $108

May 5, Purchases 28 $16 448

July 16 Purchases 19 $20 380

Dec. 7, Purchases 24 $24 576

Dec. 31 Total 80 $1,512

Dec. 31 Ending inventory 30

Dec. 31 Sales 50

a. The cost of goods sold under FIFO:

Jan. 1 Beginning inventory 9 $12 $108

May 5, Purchases 28 $16 448

July 16 Purchases 13 $20 260

Cost of goods sold $816

b. The cost of goods sold under LIFO:

May 5, Purchases 7 $16 112

July 16 Purchases 19 $20 380

Dec. 7, Purchases 24 $24 576

Cost of goods sold $1,068

c. Average unit cost:

= Total cost/Total units

= $18.9 ($1,512/80)

d. The cost of goods sold under average-cost:

= $945 (50 * $18.90)