Assume your organization has the following inventory changes during the year:

Beginning Inventory 15 units
Valued at $10,000 each
February purchases 13 units at $11,500 each
June purchases 20 units at $12,000 each
Total units used 42

Calculate the value of the ending inventory and the value of the inventory used (the inventory expense) for the year, using both the FIFO and the LIFO method of cost-flow.

Ending Inventory at FIFO Cost flow method             $  72,000

Cost of Goods sold at FIFO Cost flow method         $ 371,500

Ending Inventory at LIFO Cost flow method             $ 60,000

Cost of Goods sold at LIFO Cost flow method         $ 383,500

Explanation:

Lets analyze the available data

Beginning Inventory 15 units @ $ 10,000 = $ 150,000

February purchases 13 units @ $ 11,500 =  $  149,500

June purchases        20 units @ $ 12,000 =$  144,000

                                  48  units                       $ 443.500    

Sales                         (42) units

Ending Inventory         6  units

Computation of cost of goods sold and ending inventory under FIFO Method

In a  FIFO cost flow method, the cost of goods sold is considered from the beginning inventory, and the earlier purchases.

The ending inventory-   6 units is from June [email protected] 12,000$ 72,000

The cost of goods sold is $ 443,500 - 72,000 =                            $ 371,500

Computation of cost of goods sold and ending inventory under LIFO Method

In a  LIFO cost flow method, the cost of goods sold is considered from the latest purchases

The ending inventory- 6 units is from opening [email protected] 10,000$ 60,000

The cost of goods sold is $ 443,500 - 60,000 =                           $ 383,500

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