Exercises on inventory costing methods

Exercises on inventory costing methods


The following information is available for Massey Company:

Unit Price per unit
 Beginning inventory             4,500 38
 First purchase             6,750 45
 Second purchase             3,750 53

Assume Massey uses a periodic inventory system and has 5,250 units remaining at the end of the month. Total sales were $225,000


Calculate the cost of the closing inventory and the cost of sales

(a) using the FIFO method.

(b) Average cost method.

The Wang Company reports on his June: Total sales were $6,750,000.

Units Unit Cost
 June 1  Inventory 2,250 3,750
 12  Purchase 3,375 4,500
 23  Purchase 5,625 5,250
 30  Inventory               1,800


(a) (1) Calculate the cost of the closing inventory and the cost of sales based on the FIFO.

(b) Calculate cost of ending inventory and cost of goods sold based on FIFO. average selling price.

The fledgling company purchased four of his next inventory in June.

Unit Amount
Jun-01  1,125   39,000
Jun-10  1,500   58,500
Jun-15  1,500   63,000
Jun-28  1,125   49,500
 units on hand          750                –   

The physical inventory count on June 30 shows 750 units in stock.

Using the FIFO inventory method, the amounts allocated to cost of goods sold for June are:
Using the average cost method, the amount allocated to the goods will be: Inventory ending June 30th is as follows:
The following information is available from his July inventory records for The Queen Company.

 Units Unit Cost
 Balance at July 1225,00034
Jul-07    (187,500)
Jul-31    (300,000)
 Balance at July 3187,500
  • What is the average cost of items sold on Queen? (Rounding per unit is to two decimal places)
  • Using the average cost inventory method, what should the stock be reported on the Queens balance sheet as of July 31?(Rounding per unit is (2 decimal places)?
  • What stocks should I trade? Using the FIFO stock method, what stock would be reported on Queen’s balance sheet as of July 31?

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