Answer:
Chocolate International (CI)
Periodic Inventory system
1. Weighted-Average method:
Cost of goods sold = $91,840 (11,200 * $8.20)
Cost of ending inventory = $6,560 (800 * $8.20)
2. LIFO method:
Cost of ending inventory = $6,400 (800 * $8.00)
Cost of goods sold = Total cost Minus Cost of Ending Inventory
= $98,400 - $6,400
= $92,000
3. FIFO method:
Cost of ending inventory = $6,720 (800 * $8.40)
Cost of goods sold = Total cost Minus Cost of Ending Inventory
= $98,400 - $6,720
= $91,680
Step-by-step explanation:
a) Data and Calculations:
Date Description Units Unit Cost Total Cost
April 1, 2019 Beginning Inventory 2,500 $8.00 $20,000
April 8, 2019 Purchase 4,000 $8.10 $32,400
August 7, 2019 Purchase 2,000 $8.30 $16,600
September 28 Purchase 3,500 $8.40 $29,400
Total 12,000 $98,400
Weighted-average cost per unit = $8.20
Ending inventory 800
Units sold 11,200 (12,000 - 800)
b) The FIFO (First-in, First-out) method is based on the assumption that Chocolate sales are made from the first items in stock. This means that the ending inventory of Chocolate is made up of the newest items.
On the other hand, the LIFO (Last-in, First-out) method bases its assumption on the sale of the newest Chocolate in stock while the oldest items form the bulk of the ending inventory.
The weighted-average method calculates a weighted-average unit cost of inventory by dividing the total cost of Chocolate available for sale by the total units of Chocolate for sale. Using the period inventory system, the computations of both the cost of goods sold and the ending inventory are done at the end of the specific financial period, unlike the perpetual inventory system.