The units of an item available for sale during the year were as follows:Jan. 1 Inventory 24 units at $135 $

The units of an item available for sale during the year were as follows:


Jan. 1 Inventory 24 units at $135 $ 3,240
May 7 Purchase 36 units at $150 5,400
Nov. 23 Purchase 30 units at $162 4,860
Available for sale 90 units $13,500


There are 23 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost using (a) the first-in, first-out (FIFO) method; (b) the last-in, first-out (LIFO) method; and (c) the weighted average cost method.


Answer:
a. First-in, first-out (FIFO) method: $3,726 = 23 units × $162
b. Last-in, first-out (LIFO) method: $3,105 = 23 units × $135
c. Weighted average cost method: $3,450 (23 units × $150), where average cost = $150 = $13,500 ÷ 90 units