Shania Twain Company was formed on December 1, 2016. The following information is available from Twain’s inventory records for Product BAP.

Units Unit Cost

January 1, 2017 (beginning inventory) 600 $ 8.00

Purchases:

January 5, 2017 1,200 9.00

January 25, 2017 1,300 10.00

February 16, 2017 800 11.00

March 26, 2017 600 12.00

A physical inventory on March 31, 2017, shows 1,600 units on hand.

Instructions

Prepare schedules to compute the ending inventory at March 31, 2017, under each of the following inventory methods.

(a) FIFO (b) LIFO. (c) Weighted-average (round unit costs to two decimal places).

Under FIFO, the earliest inventories are issued first. So the latest inventories remain in the closing inventory list.

Based on this, the schedule for ending inventory of 1,600 units based on FIFO would be as follow –

So the value of ending inventory under FIFO is $18,000.

Under LIFO, the latest inventories are issued first. So the earliest inventories remain in the ending inventory list.

Based on this, the schedule for ending inventory of 1,600 units based on LIFO would be as follow –

So the value of ending inventory under LIFO is $13,800.

Under the weighted average method, the cost of ending inventory is computed based on the average cost for all inventory.

$\begin{array}{rcl}\mathrm{Average}\mathrm{cost}& =& \frac{\mathrm{Total}\mathrm{Inventory}\mathrm{value}}{\mathrm{Total}\mathrm{units}}\\ & =& \frac{\$44,600}{4,500}\\ & =& \$9.91\end{array}$

$\begin{array}{rcl}\mathrm{Value}\mathrm{of}\mathrm{ending}\mathrm{inventory}& =& \mathrm{Average}\mathrm{cost}\times \mathrm{Ending}\mathrm{Inventory}\left(\mathrm{units}\right)\\ & =& \$9.91\times 1,600\\ & =& \$15,856\end{array}$