Fairleigh Company sells home weather stations. Its beginning inventory was 50 units at $200 per...
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Fairleigh Company sells home weather stations. Its beginning inventory was 50 units at $200 per unit. During the year, Fairleigh made two purchases of the station: first, a 150-unit purchase at $220 per unit, and then 100 units at $250 per unit. The ending inventory for the year was 125 units. Fairleigh Company sells its products @ a unit price of $ 400. It has a selling and administrative cost of $10,000 (paid by cash) for the year. All sales and purchases were in cash. The income tax rate applicable to Fairleigh is 40%. Round off all calculations to the nearest dollar.
Required:
(i) Determine the amount of product costs that would be allocated to cost of goods sold and ending inventory, assuming that Fairleigh uses
a) FIFO
b) LIFO
c) Weighted average
(ii) Prepare an income statement for Fairleigh under FIFO, LIFO and Weighted Average costing methods.
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