Asked by vaughn peens on May 14, 2024
Verified
Refer to Exhibit 8-3.Assuming Davilo uses a periodic LIFO cost flow assumption, ending inventory at April 30 would be
A) $ 880
B) $ 920
C) $1, 090
D) $1, 890
Periodic LIFO
Periodic LIFO (Last-In, First-Out) is an inventory valuation method used in accounting that assumes the most recently purchased items are sold first, and ending inventory costs are determined at the end of the accounting period.
Ending Inventory
The total value of all inventory a company has in its possession at the end of a reporting period, vital for calculating cost of goods sold.
Cost Flow Assumption
An accounting method used to value inventory and determine the cost of goods sold, based on the assumed flow of goods.
- Compute the costs of inventory employing various assumptions of inventory cost flow, such as First-In, First-Out (FIFO), Last-In, First-Out (LIFO), and weighted average method.
Verified Answer
NC
Nelcy CaballeroMay 18, 2024
Final Answer :
B
Explanation :
Under periodic LIFO, the cost of goods sold and ending inventory are calculated at the end of the period based on the assumption that the last units purchased are the first units sold.
The cost of goods sold for April would be calculated as:
(150 units x $10) + (275 units x $12) + (200 units x $14) = $3,900
The ending inventory for April would be the cost of the 125 units on hand, which would be calculated as:
(75 units x $12) + (50 units x $14) = $920.
The cost of goods sold for April would be calculated as:
(150 units x $10) + (275 units x $12) + (200 units x $14) = $3,900
The ending inventory for April would be the cost of the 125 units on hand, which would be calculated as:
(75 units x $12) + (50 units x $14) = $920.
Learning Objectives
- Compute the costs of inventory employing various assumptions of inventory cost flow, such as First-In, First-Out (FIFO), Last-In, First-Out (LIFO), and weighted average method.