Three identical units of Item Beta are purchased during June, as shown below.

Three identical units of Item Beta are purchased during June, as shown below.



Item Beta Units Cost
June 2 Purchase 1 $ 50
12 Purchase 1 60
23 Purchase 1 70
Total 3 $180
Average cost per unit $ 60 ($180 ÷ 3 units)


Assume that one unit is sold on June 27 for $110. Determine the gross profit for June and ending inventory on June 30 using the (a) first-in, first-out (FIFO); (b) last-in, first-out (LIFO); and (c) weighted average cost methods.


Answer:

a. First-in, first-out (FIFO)
b. Last-in, first-out (LIFO)
c. Weighted average cost
Gross Profit Ending Inventory
June June 30
$60 ($110 – $50) $130 ($60 + $70)
$40 ($110 – $70) $110 ($50 + $60)
$50 ($110 – $60) $120 ($60 × 2)