Alternative Inventory Methods  The Totman Company has the following transactions during the months of January

 

and February:   Date	    Transaction	    Units	    Cost/Unit
January        1	Balance	200	Â
10	Purchase	50	$25
22	Sale	40	Â
28	Purchase	60	$27
February     4	Purchase	40	$28
14	Sale	50	Â
23	Sale	20	Â

 

The cost of the inventory at January 1 is $24, $23, and $15 per unit, respectively, under the FIFO, average, and LIFO cost flow assumptions.

Required

1.      Compute the cost of goods sold for each month and the inventories at the end of each month for the following alternatives:

a.    FIFO periodic

b.   FIFO perpetual

c.    LIFO periodic

d.   LIFO perpetual

e.    Weighted average (round unit costs to 2 decimal places)

f.     Moving average (round unit costs to 2 decimal places)

2.      Reconcile the difference between the LIFO periodic and the LIFO perpetual results.

3.      If the company had purchased an additional 25 units for $30 each on February 27, compute the cost of goods sold for February under FIFO periodic and LIFO periodic.

4.      For February, compute the company’s inventory turnover under the FIFO and LIFO periodic methods. Use ending inven- tory instead of average inventory for convenience. Which measure would you use in your evaluation of the company? How would you convert a monthly inventory turnover into an annual measure to use for comparison with other com- panies? What assumptions are involved?