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4 6 Inventories Determine ending inventory under a perpetual inventory system. (LO 5) (a) FIFO $925 Average $874 LIFO $790 *P6-9B Buffet Appliance Mart began operations on May 1. It uses a perpetual inventory system. During May, the company had the following purchases and sales for its Model 25 Sureshot camera. Date May 1 4 8 12 15 20 25 Units 7 8 Purchases 6 Unit Cost $150 $170 $185 Sales Units 4 5 3 4 Instructions (a) Determine the ending inventory under a perpetual inventory system using (1) FIFO, (2) moving-average cost, and (3) LIFO. (b) Which costing method produces (1) the highest ending inventory valuation and (2) the lowest ending inventory valuation?​

Answers

Answer 1

(a) the ending inventory under a perpetual inventory system using

1. FIFO= $1,560, 2. Moving average cost = $179.33, 3. LIFO = $179.33

(b) (1) FIFO produces the highest ending inventory valuation of $1,560.

(2) LIFO produces the lowest ending inventory valuation of $1,375.

What is inventory valuation?

Inventory valuation is the process of assigning a monetary value to the inventory a company has on hand for financial reporting purposes. It is important for determining the cost of goods sold, gross profit, and net income.

(a)

(1) FIFO:

Ending inventory = (Units on hand x Cost per unit) + (Units in last purchase x Cost per unit)

= (8 x $170) + (4 x $150)

= $1,560

(2) Moving-average cost:

Average cost per unit = (Total cost of units available for sale) / (Total units available for sale)

= ($1,350 + $1,360) / (15 units)

= $179.33

Ending inventory = (Units on hand x Average cost per unit)

= 8 x $179.33

= $1,434.64

(3) LIFO:

Ending inventory = (Units on hand x Cost per unit) + (Units in last purchase x Cost per unit)

= (3 x $185) + (5 x $170)

= $1,375

(b)

(1) FIFO produces the highest ending inventory valuation of $1,560.

(2) LIFO produces the lowest ending inventory valuation of $1,375.

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Related Questions

1) according to a recent survey, 30% of credit card holders pay off their balances in full each month. if a random sample of 400 credit card holders is taken, what is the probability that

Answers

Based on the given information, the probability of a credit card holder paying off their balance in full each month is 30% (0.30). Since a random sample of 400 credit card holders is taken, the expected number of cardholders who pay off their balance in full is 0.30 * 400 = 120. Therefore, the probability of a randomly selected credit card holder from the sample paying off their balance in full is 120/400 = 0.30 or 30%.

According to a recent survey, 30% of credit card holders pay off their balances in full each month. If a random sample of 400 credit card holders is taken, the probability that less than 100 pay off their balances in full each month can be determined as follows:Step 1: Determine the mean (μ) and the standard deviation (σ) of the distribution using the following formulas:μ = np = 400 x 0.30 = 120σ = √np(1 - p) = √(400 x 0.30 x 0.70) = 8.66Step 2: Determine the z-score using the formula:z = (x - μ) / σwhere x is the number of credit card holders who pay off their balances in full each month.

For less than 100 pay off their balances in full each month, z = (100 - 120) / 8.66 = -2.31Step 3: Determine the probability using the standard normal distribution table. The area to the left of z = -2.31 is 0.0104.Therefore, the probability that less than 100 pay off their balances in full each month is 0.0104 (or approximately 1.04%).
Based on the given information, the probability of a credit card holder paying off their balance in full each month is 30% (0.30). Since a random sample of 400 credit card holders is taken, the expected number of cardholders who pay off their balance in full is 0.30 * 400 = 120. Therefore, the probability of a randomly selected credit card holder from the sample paying off their balance in full is 120/400 = 0.30 or 30%.

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