Cost Accounting Weighted Average and FIFO Inventory Valuation Methods

Exercise 1

Below is information for the month of April corresponding to the only product marketed by the company POWER Inc.

Balance as of April 1: 120 units at $7.00 each.

Requested:

Prepare the inventory movement records for the month of April applying the Weighted Average and FIFO (FIFO) methods. Discuss the differences in cost of goods sold and inventory balance obtained by both costing methods.

Purchases Date Units Sale price in $ (each) 9.44 70 7-Apr 12-Apr 22-Apr 90 10.62 75 11.8 Sales Date Units Sale value in $ (each) 13.00 80 90 14.00 8-Apr 11-Apr 21-Apr 24-Apr 50 15.00 15 15.00