19. SPRAY-PAINT INVENTORY The Graphic Hobby House made purchases of assorted colors of spray paint during the year as follows. Beginning inventory 200 cans at $2.20 March 400 cans at $2.40 May 700 cans at $2.00 August 500 cans at $2.30 November 300 cans at $2.60 At the end of the year, they had 450 cans of spray paint in stock.
a) Weighted average method
Total cost = 200 * 2.20 + 400 * 2.40 + 700 * 2 + 500 * 2.30 + 300 * 2.60
Total cost = 4730
Average cost per unit = 4730/ 200 + 400 + 700 +500 + 300
Average cost per unit = 4730/ 2100
Average cost per unit = 2.252
Total Inventory value = 2.252 * 450 units
Total inventory value = 1013.4
b) FIFO method
450 units are left in the stock it would consume the last 300 units
So it will be 450 -300 = 150 units ( we will use the pricing of second last stock)
Cost of the inventory now
300 * 2.60 + 150 * 2.30
= 1125
The inventory value using FIFO method = 1125
c) LIFO method
450 units are in stock it will take the 200 units of the first block so it will be = 450 -200 = 250 Units ( we will use the pricing of second stock)
The value of the inventory:
200 * 2.20 + 250 * 2.40
The value of the inventory using LIFO method = 1040
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