Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. applying and analyzing inventory costing methodsat

Applying and Analyzing Inventory Costing MethodsAt the beginning of the current period, Chen carried 1,000...

60.1K

Verified Solution

Question

Accounting

Applying and Analyzing Inventory Costing MethodsAt the beginning of the current period, Chen carried 1,000 units of its product with a unit cost of $32. A summary of purchases during the current period follows.

Units Unit Cost Cost

Beginning Inventory .... 1,000 $32 $32,000

Purchases: #1 ......... 1,800 34 61,200

#2 ......... 800 38 30,400

#3 ......... 1,200 41 49,200

During the current period, Chen sold 2,800 units.

a. Assume that Chen uses the first-in, first-out method. Compute both cost of goods sold for the current period and the ending inventory balance. Use the financial statement effects template to record costof goods sold for the period.

b. Assume that Chen uses the last-in, first-out method. Compute both cost of goods sold for the current period and the ending inventory balance.

c. Assume that Chen uses the average cost method. Compute both cost of goods sold for the current period and the ending inventory balance.

d. Which of these three inventory costing methods would you choose to:

1. Reflect what is probably the physical flow of goods? Explain.

2. Minimize income taxes for the period? Explain.

3. Report the largest amount of income for the period? Explain.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students