Appleby buys and sells inventory during the month of August as follows: Opening inventory 100 units $2.52/unit 4 August Sales 20 units 8 August Purchases 140 units $2.56/unit 10 August Sales 90 units 18 August Purchases 200 units $2.78/unit 20 August Sales 180 units The periodic weighted average for the month is calculated as follows: Total value of inventory (opening inventory plus purchase costs during the month) divided by total units (opening inventory plus purchase costs during the month).Which of the following statements is true?
A、Closing inventory is $19.50 higher when using the FIFO method instead of the periodic weighted average.
B、Closing inventory is $19.50 lower when using the FIFO method instead of the periodic weighted average.
C、Closing inventory is $17.50 higher when using the FIFO method instead of the periodic weighted average.
D、Closing inventory is $17.50 lower when using the FIFO method instead of the periodic weighted average.
A、Closing inventory is $19.50 higher when using the FIFO method instead of the periodic weighted average.
B、Closing inventory is $19.50 lower when using the FIFO method instead of the periodic weighted average.
C、Closing inventory is $17.50 higher when using the FIFO method instead of the periodic weighted average.
D、Closing inventory is $17.50 lower when using the FIFO method instead of the periodic weighted average.
【参考答案及解析】
In times of rising prices FIFO will give a higher valuation of the closing inventory as the older. lower prices will be issued to production. Opening inventory + units purchased 440 Units sold (290) Closing inventory (units) 150 FIFO Closing inventory: 150 units @ $2.78 $417 AVCO Weighted average cost $ 100 units @ $2.52 252 140 units @ $2.56 358 200 units @ $2.78 556 440 1,166 Average cost per unit 1,166/440 $2.65 Closing inventory: 150 units @ $2.65 $397.50 FIFO higher by (417 - 397.50) $19.50
In times of rising prices FIFO will give a higher valuation of the closing inventory as the older. lower prices will be issued to production. Opening inventory + units purchased 440 Units sold (290) Closing inventory (units) 150 FIFO Closing inventory: 150 units @ $2.78 $417 AVCO Weighted average cost $ 100 units @ $2.52 252 140 units @ $2.56 358 200 units @ $2.78 556 440 1,166 Average cost per unit 1,166/440 $2.65 Closing inventory: 150 units @ $2.65 $397.50 FIFO higher by (417 - 397.50) $19.50