Calculate ending inventory and cost of goods sold using the last in, first out (LIFO); moving; and weighted average methods.
Tony Merchandise Company has the following information for the month of February:
|Feb. 2||Beginning inventory||20||units||@||$12||per unit|
|Feb. 5||Purchase||20||units||@||$16||per unit|
|Feb. 21||Purchase||12||units||@||$18||per unit|
Answer the following questions for Tony Merchandise Company:
- Calculate the dollar ending inventory if first in, first out (FIFO) is used.
- Calculate the cost of goods sold if LIFO is used.
- Calculate the dollar ending inventory if weighted average is used.
- According to the generally accepted accounting principles (GAAP), discuss the objectives of inventory costing.
- Discuss the consequences of selecting one method instead of others.
Pacioli Pasta uses a process costing system. All material is added at the start of the production process. Direct labour and overhead are added at the same rate throughout the process. Pacioli’s records indicate the following production for March:
|Beginning inventory (70% complete as to conversion)||12,000 units|
|Started during March||17,000 units|
|Completed during March||26,000 units|
|Ending inventory for March is 20 per cent complete as to conversion.|
a.Compute the equivalent units of production (EUP) for direct material and conversion costs using weighted average process costing. (5 Marks)
b.Compute the EUP for direct material and conversion costs using FIFO process costing. (5 Marks)
c.Reconcile the calculations in parts a. and b. (5 Marks)
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