The following units of a particular item were available for sale during the year:Beginning inventory 36 units at $400

The following units of a particular item were available for sale during the year:


Beginning inventory 36 units at $400
Sale 24 units at $1,000
First purchase 80 units at $420
Sale 60 units at $1,000
Second purchase 75 units at $440
Sale 55 units at $1,000

The firm uses the perpetual inventory system, and there are 52 units of the item on hand at the end of the year. What is the total cost of the ending inventory according to (a) FIFO, (b) LIFO?

Answer:

a. $22,880 ($440 × 52 units)
b. $22,000 [($400 × 12 units) + ($420 × 20 units) + ($440 × 20 units)] = $4,800 + $8,400 + $8,800