Copyright © 2008, The McGraw-Hill Companies, Inc.
- At the start of the month, a bakery had 800 pounds of premium cake fl our at a cost of $635. Later, the bakery placed
an order for 650 pounds of the same type of fl our at a cost of $472.50. When the new order arrived, the bakery had
250 pounds of this fl our left. At the end of the month, the bakery had 148 pounds of fl our left.
a. Calculate the value of the fl our inventory when the order arrived, using FIFO.
b. Calculate the value of the fl our inventory at the end of the month, using FIFO. - Smith’s County Line Heating Supply purchased 10,000 gallons of heating oil for $18,825 from one supplier. The next
day the company bought an additional 14,000 gallons from another supplier for $24,360. The company already had
8,250 gallons in inventory at a cost of $12,350 when it made these purchases. It did not make any sales in the time
between these two purchases.
a. Calculate the value (at cost) of the company’s heating oil inventory immediately after these purchases, using FIFO.
b. Suppose that the company sold 16,000 gallons of heating oil from this inventory. Calculate the value (at cost) of
the remaining inventory, using FIFO.
c. Suppose that the company then purchased 20,000 additional gallons of heating oil for $38,953. Calculate the
value (at cost) of the company’s heating oil inventory after this purchase, using FIFO.
d. Suppose that the company sells 18,000 gallons from this inventory. Calculate the value (at cost) of the remaining
inventory, using FIFO. - The bookstore at Northeastern Pennsylvania Community College purchased 153 copies of a biology textbook at a cost
of $73.50 each. From enrollment fi gures, the bookstore realized that it did not have enough books, and so it rush-
ordered 80 additional copies at a cost of $98.35 each. This order arrived at the end of the fi rst week of classes, at
which time it had sold 120 copies of the book. At the end of the third week of classes it had 27 copies of the book left in
stock.
a. Calculate the value (at cost) of the inventory of this book at the end of the fi rst week of classes, using FIFO.
b. Calculate the value (at cost) of the inventory of this book at the end of the third week of classes, using FIFO.
c. Calculate the average cost per book (i) at the end of the fi rst week and (ii) at the end of the third week of classes,
using FIFO.
C. LIFO- What does the acronym LIFO stand for?
- Burned Beans Coffee Shop ordered 85 pounds of Charred Roast coffee beans at a cost of $5.35 per pound. It placed
a new order for 57 pounds at $6.10 per pound. When the new order arrived it had 28 pounds left from the original
order. Calculate the value of the inventory of this type of coffee bean, using LIFO. - Stassler Hardware ordered 25 model TJX-35 chain saws. The total cost of this order was $1,813. After a few weeks, the
store manager placed a new order for another 20 at a cost of $1,575. When this order arrived, the store had 8 saws left
from the original order. What was the value of its inventory of this particular saw when the new order arrived, based on
LIFO? - At the start of the month, a bakery had 800 pounds of premium cake fl our at a cost of $635. Later, the bakery placed
an order for 650 pounds of the same type of fl our at a cost of $472.50. When the new order arrived, the bakery had
250 pounds of this fl our left. At the end of the month, the bakery had 148 pounds of fl our left.
a. Calculate the value of the fl our inventory when the order arrived, using LIFO.
Exercises 15.2 601