Wednesday 4 October 2017

Cortez Company sells chairs that are used at computer stations. Its beginning inventory of chairs was 130 units at $60 per unit.

Cortez Company sells chairs that are used at computer stations. Its beginning inventory of chairs was 130 units at $60 per unit. During the year, Cortez made two batch purchases of this chair. The first was a 146-unit purchase at $68 per unit; the second was a 224-unit purchase at $72 per unit. During the period, it sold 292 chairs.
 
Required
Determine the amount of product costs that would be allocated to cost of goods sold and ending
inventory, assuming that Cortez uses
a. FIFO:

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b. LIFO:
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c. Weighted average:
 
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Explanation:
CORTEZ COMPANY
Inventory Purchases
  Beginning inventory 130   @ $60   = $7,800  
  First purchase 146   @ 68   = 9,928  
  Second purchase 224   @ 72   = 16,128  
 
     
  Goods available for sale 500         $33,856  
 

     




c.        
Total Cost ÷ Total Units = Cost per Unit
$ 33,856 ÷ 500 = $ 68


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