Accounting question:?could anyone please help with ,FIFO,Average cost,LIFO cost flow assumption?
1. Assume that the company uses the FIFO cost flow assumption. The value of the ending inventory at December 31 is (400 x $8) + (200 x $7) = $4,600 2. Assume that the company uses the average cost flow assumption. The value of the ending inventory on December 31 is 600 x $6.23* = $3,738 *TOTAL UNIT=1300 AND TOTAL COST =8100; average cost = $8100/1300 = $6.23 3. Assume that the company uses the LIFO cost flow assumption. The value of the ending inventory on December 31 is (200 x $4) + (400 x $5) = $2,800 4. Determine the difference in the amount of income that the company would have reported if it had used FIFO instead of Average. Would income have been greater or less? Difference in income = $4,600 – $3,738 = $862. Income would have been greater by $862 if FIFO was used.
