Asked by Kiasha Trammell on Jun 06, 2024
Verified
A beginning inventory and purchases of computer parts follow: The company sold 20 units from beginning inventory, 5 units from the first purchase, and 18 units from the second purchase.
Required: Determine the (a) cost of an ending inventory and (b) Cost of Goods Sold under the specific invoice method. Round to two decimal places if required.
Specific Invoice Method
An inventory valuation method that tracks each item in inventory by its specific cost and invoice.
Ending Inventory
The total value of goods available for sale at the end of the accounting period, calculated by adding purchases to the beginning inventory and subtracting the cost of goods sold.
Cost of Goods Sold
Expenses directly related to the production of the goods sold by a business, including material costs and direct labor, crucial for calculating gross profit.
- Understand the basic concept and calculation of the cost of goods sold.
- Understand the specific invoice method and its application in inventory costing.
Verified Answer
DS
Daniel StubyJun 09, 2024
Final Answer :
a) Ending Inventory: (10 × $4) + (11 × $7) + (7 × $12) = $201
b) COGS: (20 × $4) + (5 × $7) + (18 × $12) = $331
b) COGS: (20 × $4) + (5 × $7) + (18 × $12) = $331
Learning Objectives
- Understand the basic concept and calculation of the cost of goods sold.
- Understand the specific invoice method and its application in inventory costing.