Question - Assume a periodic inventory costing method.                                                     

(a) Compute the cost of the ending inventory and the cost of goods sold under (1) FIFO, (2) LIFO, and (3) average-cost.                                                    

(b) Which costing method gives the highest ending inventory? The highest cost of goods sold? Why?                                                

(c) Explain why the average cost is not $6.                                                      

(d) For Extra Credit, up to 5 points, assume a perpetual inventory costing system. Compute the ending inventory and cost of goods sold as if half of the sales were made after August 12 and before August 23; and half of the sales were made after August 23 and before August 31. Show all your work and calculations. Discuss why the COGS and EI are different values under the perpetual method. 

Date Explanation Units Unit Cost Total Cost

1-Aug Beginning inventory 120 $5 $600

12-Aug Purchase  370 $6 $2,220

23-Aug Purchase  500 $7 $3,500

31-Aug Ending Inventory 160