Math  /  Data & Statistics

QuestionThe Stilton Company has the following inventory and credit purchases during the fiscal year ended December 31, 2023. \begin{tabular}{ll} \hline Beginning & 605 units @ \$80/unit \\ Feb. 10 & 325 units @ \$77/unit \\ Aug. 21 & 205 units @ \$90/unit \\ \hline \end{tabular}
Stilton Company has two credit sales during the period. The units have a selling price of $140.00\$ 140.00 per unit. \begin{tabular}{|l|l|l|} \hline \multicolumn{3}{|c|}{ Sales } \\ \hline Mar. & 15 & 405 \\ Sept. & 10 & 310 units \\ \hline \end{tabular}
Stilton Company uses a periodic inventory costing system. Required:
1. Calculate the dollar value of cost of goods sold and ending inventory using: (Round the "Weighted-average cost" to 2 decimal places. Do not round intermediate calculations. Round final answers to 2 decimal places.) \begin{tabular}{|l|l|l|l|l|} \hline & & \begin{tabular}{c} Ending \\ Inventory \end{tabular} & \multicolumn{2}{c|}{\begin{tabular}{c} Cost of Goods \\ Sold \end{tabular}} \\ \hline a. & FIFO & $\$ & 35,005.0035,005.00 & $\$ \\ \hline b & Moving weighted average & $\$ & 33,700.8033,700.80 & ® \\ \hline \end{tabular}

Studdy Solution

STEP 1

1. The company uses a periodic inventory system.
2. The FIFO (First-In, First-Out) method assumes the oldest inventory is sold first.
3. The Moving Weighted Average method calculates the average cost of inventory after each purchase.
4. The sales and purchases are in chronological order.

STEP 2

1. Calculate the cost of goods sold (COGS) and ending inventory using the FIFO method.
2. Calculate the cost of goods sold (COGS) and ending inventory using the Moving Weighted Average method.

STEP 3

Calculate the total units available for sale:
\begin{align*} \text{Beginning Inventory} & : 605 \text{ units} \\ \text{Feb. 10 Purchase} & : 325 \text{ units} \\ \text{Aug. 21 Purchase} & : 205 \text{ units} \\ \text{Total Units Available} & : 605 + 325 + 205 = 1135 \text{ units} \end{align*}

STEP 4

Calculate the total units sold:
\begin{align*} \text{Mar. 15 Sale} & : 405 \text{ units} \\ \text{Sept. 10 Sale} & : 310 \text{ units} \\ \text{Total Units Sold} & : 405 + 310 = 715 \text{ units} \end{align*}

STEP 5

Calculate the ending inventory units:
Ending Inventory Units=1135715=420 units\text{Ending Inventory Units} = 1135 - 715 = 420 \text{ units}

STEP 6

Apply the FIFO method to calculate COGS and ending inventory:
- **COGS Calculation**: - Sell 405 units from beginning inventory: 405×80=$32,400 405 \times 80 = \$32,400 - Sell remaining 310 units from beginning inventory: 200×80=$16,000 200 \times 80 = \$16,000 - Sell 110 units from Feb. 10 purchase: 110×77=$8,470 110 \times 77 = \$8,470
Total COGS=32,400+16,000+8,470=$56,870\text{Total COGS} = 32,400 + 16,000 + 8,470 = \$56,870
- **Ending Inventory Calculation**: - Remaining 215 units from Feb. 10 purchase: 215×77=$16,555 215 \times 77 = \$16,555 - All 205 units from Aug. 21 purchase: 205×90=$18,450 205 \times 90 = \$18,450
Total Ending Inventory=16,555+18,450=$35,005\text{Total Ending Inventory} = 16,555 + 18,450 = \$35,005

STEP 7

Apply the Moving Weighted Average method to calculate COGS and ending inventory:
- **Weighted Average Cost Calculation**: - After Feb. 10 purchase: \text{Average Cost} = \frac{(605 \times 80) + (325 \times 77)}{605 + 325} = \frac{48,400 + 25,025}{930} = 78.01 \] - After Aug. 21 purchase: \text{Average Cost} = \frac{(930 \times 78.01) + (205 \times 90)}{1135} = \frac{72,553 + 18,450}{1135} = 80.32 \]
- **COGS Calculation**: - Sell 715 units at average cost after Aug. 21: 715×80.32=$57,413.80 715 \times 80.32 = \$57,413.80
- **Ending Inventory Calculation**: - Remaining 420 units at average cost after Aug. 21: 420×80.32=$33,734.40 420 \times 80.32 = \$33,734.40
The calculated values are: - **FIFO**: Ending Inventory = \$35,005.00, COGS = \$56,870.00 - **Moving Weighted Average**: Ending Inventory = \$33,734.40, COGS = \$57,413.80

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