Kuchin Company reports the following for the month of June. Instructions(a) Compute the cost of the...

Question

Kuchin Company reports the following for the month of June.

Instructions
(a) Compute the cost of the ending inventory and the cost of goods sold under
(1) FIFO,
(2) LIFO, and
(3) average-cost.
(b) Which costing method gives the highest ending inventory? The highest cost of goods sold? Why?
(c) How do the average-cost values for ending inventory and cost of goods sold relate to ending inventory and cost of goods sold for FIFO and LIFO?
(d) Explain why the average cost is not $6.

Robert · Accepted Answer

A) Cost of Ending Inventory 
Using FIFO Method 
Ending Inventory = 240*$7 
      = $1680 
Using LIFO Method 
Ending Inventory   120*$5 = $600  
        120*$6 = $720 
        Total       $ 1320 
Using Average Cost 
Units Cost 
120   600 
370 2220 
500 3500 
990 6320 
Average Cost = 6320/990 
   = 6.38 
Ending Inventory = 240*$6.

Kuchin Company reports the following for the month of June. Instructions (a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO, (2) LIFO, and (3) average-cost. (b)...

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