# Shawn company had 150 units in the beginning inventory at a total cost of 15,750. The company...

## Question:

Shawn company had 150 units in the beginning inventory at a total cost of 15,750. The company purchased 300 units at total cost of 39,000. At the end of the year, Shawn had 113 units in ending inventory. Compute the of cost ending inventory and cost of goods sold under FIFO, LIFO, and average cost. Round average cost per unit and final answers to 0 decimal places.

## Inventory Valuation Methods:

Some of the common inventory valuation methods are first-in, first-out (FIFO), last-in, first-out (LIFO), and average cost. FIFO assumes the first units in inventory are the first sold. LIFO assumes the last units in inventory are the first sold. The average cost method calculates an average cost per unit and it applies it to units sold and units in ending inventory. Each will result in a different cost of goods sold and ending inventory.

## Answer and Explanation:

To calculate the unit cost use the following formula:

• Unit cost = Total cost / Units
• Unit cost for beginning inventory = $15,750 / 150 units =$105 per unit
• Unit cost for purchased units = $39,000 / 300 units =$130 per unit

Units Unit Cost Total Cost
Beginning inventory 150 $105$15,750
Purchases 300 $130$39,000
Total 450 $54,750 • Units sold = Total units - Units in ending inventory • Units sold = 450 units - 113 units = 337 units Shawn company sold 337 units. #### FIFO The FIFO inventory method assumes that the first units in inventory are the first units sold. FIFO Cost of Goods Sold The 337 units sold consist of the 150 units from beginning inventory and 187 units from purchases. FIFO Units Unit Cost Cost of goods sold Beginning inventory 150$105 $15,750 Purchases 187$130 $24,310 Total 337$40,060

FIFO Ending Inventory

The 113 units in ending inventory will be from the purchases.

FIFO Units Unit Cost Ending Inventory
Purchases 113 $130$14,690
Total 113 $14,690 #### LIFO The LIFO inventory method assumes the last units in inventory are the first ones sold. LIFO Cost of Goods Sold The 337 units sold consist of the 300 units from purchases and 37 units from beginning inventory. LIFO Units Unit Cost Cost of goods sold Purchases 300$130 $39,000 Beginning inventory 37$105 $3,885 Total 337$42,885

LIFO Ending Inventory

The 113 units in ending inventory will be from beginning inventory.

LIFO Units Unit Cost Ending Inventory
Beginning inventory 113 $105$11,865

#### Learn more about this topic:

Inventory Valuation Methods: Specific Identification, FIFO, LIFO & Weighted Average

from Accounting 101: Financial Accounting

Chapter 6 / Lesson 11
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