Oct.

1  Beginning inventory   60  $ 26

Oct. 9  Purchase   130    28

Oct. 11  Sale    95   40

Oct. 17  Purchase  95  29 

Oct. 22 Sale  60   45

Oct. 25  Purchase  70   31

Oct.29   Sale  105    45

a. 

Description Units Unit Cost Total Cost Computation Total Cost

Oct. 1 Beginning Inventory 60 26 =60*26 1,560
Oct. 9 Purchase 130 28 =130*28 3,640
Oct. 17 Purchase 95 29 =95*29 2,755
Oct. 25 Purchase 70 31 =70*31 2,170
Goods Available for Sale 355     10,125

 Weighted average cost = Cost of Goods Available for Sales / Number of Goods Available for
Sale

Weighted average cost = 10,125 / 355

Weighted average cost = $ 28.52

b. 

Total Unit Sales = 95 + 60 + 105 = 260 units

 
Total Sales = (95 x 40) + (60 x 45) + (105 x 45) = 3,800 + 2,700 + 4,725 = 11,225

Units in Ending Inventory = Number of Goods Available for Sale - Total Unit Sales

Units in Ending Inventory = 355 - 260 = 95 units

(1) LIFO.

Using LIFO, Units sold are assumed to be from LATEST PURCHASES.

Description Units Unit Cost Total Cost Computation Total Cost

Oct. 9 Purchase 95 28 =95*28 2,660
Oct. 17 Purchase 95 29 =95*29 2,755
Oct. 25 Purchase 70 31 =70*31 2,170
Cost of Goods Sold 260     7,585

Using LIFO, Units in Ending Inventory are assumed to be from EARLIEST PURCHASES.

Description Units Unit Cost Total Cost Computation Total Cost

Oct. 1 Beginning Inventory 60 26 =60*26 1,560
Oct. 9 Purchase 35 28 =35*28 980
Ending Inventory 95     2,540

Gross Profit = Total Sales - Cost of Goods Sold

Gross Profit = 11,225 - 7,585

Gross Profit = 3,640

(2) FIFO.

Using FIFO, Units sold are assumed to be from EARLIEST PURCHASES.

Description Units Unit Cost Total Cost Computation Total Cost

Oct. 1 Beginning Inventory 60 26 =60*26 1,560
Oct. 9 Purchase 130 28 =130*28 3,640
Oct. 17 Purchase 70 29 =70*29 2,030
Cost of Goods Sold 260     7,230

Using FIFO, Units in Ending Inventory are assumed to be from LATEST PURCHASES.

Description Units Unit Cost Total Cost Computation Total Cost

Oct. 17 Purchase 25 29 =25*29 725
Oct. 25 Purchase 70 31 =70*31 2,170
Ending Inventory 95     2,895

Gross Profit = Total Sales - Cost of Goods Sold

Gross Profit = 11,225 - 7,230

Gross Profit = 3,995

(3) Average cost. 

*For Weighted average cost computation, please refer to the first item above.

Cost of Goods Sold = Total Unit Sales x Weighted average cost

Cost of Goods Sold = 260 x 28.52

Cost of Goods Sold = 7,415.20

Cost of Ending Inventory = Units in Ending Inventory x Weighted average cost

Cost of Ending Inventory = 95 x 28.52

Cost of Ending Inventory = 2,709.40

Gross Profit = Total Sales - Cost of Goods Sold

Gross Profit = 11,225 - 7,415.20

Gross Profit = 3,809.80