The records at the end of January of the current year for Young Company showed the following for a particular kind of merchandise: Beginning Inventory at FIFO: 16 Units @ $16 = $256 Beginning Inventory at LIFO: 16 Units @ $12 = $192 January Transactions Units Unit Cost Total Cost Purchase, January 9 28 $ 14 $ 392 Purchase, January 20 53 19 1,007 Sale, January 21 (at $42 per unit) 37 Sale, January 27 (at $43 per unit) 29 Required: 1. Compute the inventory turnover ratio for the month of January under the FIFO and LIFO inventory costing methods. 2. Which costing method is the more accurate indicator of the efficiency of inventory management? I've gotten a bartleby expert to help yesterday: ========== 1. Inventory Turnover Ratio: FIFO Method Total Units Sold = 37 + 29 = 66 Units Total Cost of Goods Available = (16 units x $16) + (28 units x $14) + (53 units x $19) = $256 + $392 + $1007 = $1655 Cost of Goods Sold = (16 units x $16) + (28 units x $14) + (22 units x $19) = $256 + $392 + $418 = $1066 Cost of Inventory = Total Cost of Goods Available - Cost of Goods Sold = $1655 - $1066 = $589 Average Inventory = ($256 + $589) / 2 = $422.5 FIFO Inventory Turnover Ratio = $1066 / $422.5 = 2.52 LIFO Method Total Units Sold = 37 + 29 = 66 Units Total Cost of Goods Available = (16 units x $12) + (28 units x $14) + (53 units x $19) = $192 + $392 + $1007 = $1591 Cost of Goods Sold = (53 units x $19) + (13 units x $14) = $1007 + $182 = $1189 Cost of Inventory = Total Cost of Goods Available - Cost of Goods Sold = $1591 - $1189 = $402 Average Inventory = ($192 + $402) / 2 = $297 LIFO Inventory Turnover Ratio = $1189 / $297 = 4.00 ============= I still dont know how he / she got these unit numbers: FIFO Cost of Goods Sold = (22 units x $19) LIFO Cost of Goods Sold = (13 units x $14)
The records at the end of January of the current year for Young Company showed the following for a particular kind of merchandise:
Beginning Inventory at FIFO: 16 Units @ $16 = $256
Beginning Inventory at LIFO: 16 Units @ $12 = $192
| January Transactions | Units | Unit Cost |
Total Cost | ||
| Purchase, January 9 | 28 | $ | 14 | $ | 392 |
| Purchase, January 20 | 53 | 19 | 1,007 | ||
| Sale, January 21 (at $42 per unit) | 37 | ||||
| Sale, January 27 (at $43 per unit) | 29 | ||||
Required:
1. Compute the inventory turnover ratio for the month of January under the FIFO and LIFO inventory costing methods.
2. Which costing method is the more accurate indicator of the efficiency of inventory management?
I've gotten a bartleby expert to help yesterday:
==========
1. Inventory Turnover Ratio:
FIFO Method
Total Units Sold = 37 + 29 = 66 Units
Total Cost of Goods Available = (16 units x $16) + (28 units x $14) + (53 units x $19) = $256 + $392 + $1007 = $1655
Cost of Goods Sold = (16 units x $16) + (28 units x $14) + (22 units x $19) = $256 + $392 + $418 = $1066
Cost of Inventory = Total Cost of Goods Available - Cost of Goods Sold = $1655 - $1066 = $589
Average Inventory = ($256 + $589) / 2 = $422.5
FIFO Inventory Turnover Ratio = $1066 / $422.5 = 2.52
LIFO Method
Total Units Sold = 37 + 29 = 66 Units
Total Cost of Goods Available = (16 units x $12) + (28 units x $14) + (53 units x $19) = $192 + $392 + $1007 = $1591
Cost of Goods Sold = (53 units x $19) + (13 units x $14) = $1007 + $182 = $1189
Cost of Inventory = Total Cost of Goods Available - Cost of Goods Sold = $1591 - $1189 = $402
Average Inventory = ($192 + $402) / 2 = $297
LIFO Inventory Turnover Ratio = $1189 / $297 = 4.00
=============
I still dont know how he / she got these unit numbers:
| FIFO |
| Cost of Goods Sold = (22 units x $19) |
| LIFO |
| Cost of Goods Sold = (13 units x $14) |
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