Problem 1: In June, Naperville Company reports the following for the month of June.
Units Unit Cost Total Cost
June 1 Inventory 200 $5 $1,000
12 Purchases 300 6 1,800
23 Purchases 500 7 3,500
30 Inventory 150
Instructions
(a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO and (2) LIFO.
(b) Which costing method gives the higher ending inventory? Why?
(c) Which method results in the higher cost of goods sold? Why?
Problem 2: Inventory data for Naperville Company are presented in E4-16.
Instructions:
(a) Compute the cost of the ending inventory and the cost of goods sold using the average cost method.
(b) Will the results in (a) be higher or lower than the results under (1) FIFO and (2) LIFO?
(c) Why is the average unit cost not $6?