Question

Bramble Company uses a periodic system reports the following for the month of June.

Units
Unit Cost
Total Cost
June 1 Inventory 290 $5 $ 1,450
12 Purchase 400 6 2,400
23 Purchase 300 7 2,100
30 Inventory 130



Compute the cost of the ending inventory and the cost of goods sold under FIFO and LIFO.

FIFO
LIFO
Cost of the ending inventory
$
860
$
Cost of goods sold
$
$




Which costing method gives the higher ending inventory?







Which method results in the higher cost of goods sold?

Answer 1

Results are below.

Step-by-step explanation:

Under the FIFO (first-in, first-out) method, the cost of goods sold is calculated using the cost of the first units incorporated into inventory:

Units sold= 860

COGS= 290*5 + 400*6 + 170*7

COGS= $5,040

Ending inventory= 130*7= $910

Under the LIFO (last-in, first-out) method, the cost of goods sold is calculated using the cost of the last units incorporated into inventory:

COGS= 300*7 + 400*6 + 160*5

COGS= $5,300

Ending inventory= 130*5= $650

As the cost of the units increases in time, the FIFO method provides the higher ending inventory.