Altira Corporation provides the following information related to its inventory during the month of August 2024: August 1 Inventory on hand—2,900 units; cost $7.00 each. August 8 Purchased 14,500 units for $6.40 each. August 14 Sold 11,600 units for $12.90 each. August 18 Purchased 8,700 units for $6.00 each. August 25 Sold 10,600 units for $11.90 each. August 28 Purchased 4,900 units for $5.80 each. August 31 Inventory on hand—8,800 units.
To calculate the cost of goods sold (COGS) and the ending inventory, we need to calculate the total cost of the inventory purchased during the month and subtract the cost of goods sold.
1. Calculate the total cost of inventory purchased:
August 8: 14,500 units x $6.40 = $92,800
August 18: 8,700 units x $6.00 = $52,200
August 28: 4,900 units x $5.80 = $28,420
Total cost of inventory purchased = $92,800 + $52,200 + $28,420 = $173,420
2. Calculate the cost of goods sold:
August 14: 11,600 units x $7.00 = $81,200
August 25: 10,600 units x $7.00 = $74,200
Cost of goods sold = $81,200 + $74,200 = $155,400
3. Calculate the ending inventory:
August 1: 2,900 units x $7.00 = $20,300
Add the units purchased after August 1:
August 8: 14,500 units
August 18: 8,700 units
August 28: 4,900 units
Total units purchased = 14,500 + 8,700 + 4,900 = 28,100
Total units on hand at the end of August = 28,100 + 2,900 = 31,000
Ending inventory = 31,000 units x $7.00 = $217,000
Therefore, the COGS for the month of August is $155,400 and the ending inventory is $217,000.
To calculate the cost of goods sold (COGS) and the value of ending inventory, we need to calculate the cost of inventory purchased and sold during the month of August.
First, let's calculate the cost of purchases in August:
- On August 8, Altira Corporation purchased 14,500 units for $6.40 each. The total cost of this purchase is 14,500 units * $6.40 = $92,800.
- On August 18, Altira Corporation purchased 8,700 units for $6.00 each. The total cost of this purchase is 8,700 units * $6.00 = $52,200.
- On August 28, Altira Corporation purchased 4,900 units for $5.80 each. The total cost of this purchase is 4,900 units * $5.80 = $28,420.
The total purchases for the month of August is $92,800 + $52,200 + $28,420 = $173,420.
Next, let's calculate the cost of goods sold (COGS):
- On August 14, Altira Corporation sold 11,600 units for $12.90 each. The COGS for these units is 11,600 units * $7.00 (cost per unit) = $81,200.
- On August 25, Altira Corporation sold 10,600 units for $11.90 each. The COGS for these units is 10,600 units * $7.00 (cost per unit) = $74,200.
The total COGS for the month of August is $81,200 + $74,200 = $155,400.
Finally, let's calculate the value of ending inventory:
- On August 1, Altira Corporation had 2,900 units on hand. The value of this inventory is 2,900 units * $7.00 (cost per unit) = $20,300.
- On August 31, Altira Corporation had 8,800 units on hand. The value of this inventory is 8,800 units * $7.00 (cost per unit) = $61,600.
Therefore, the value of ending inventory on August 31 is $61,600.
To summarize:
- Cost of Goods Sold (COGS) for August: $155,400
- Value of Ending Inventory on August 31: $61,600
To calculate the ending inventory and cost of goods sold for Altira Corporation for the month of August 2024, we need to analyze the information provided and apply the appropriate inventory costing method (FIFO, LIFO, or average cost).
In this case, let's assume that Altira Corporation uses the FIFO (first-in, first-out) method for inventory costing. According to the FIFO method, the cost of the inventory sold is based on the earliest purchases, while the cost of the ending inventory is based on the most recent purchases.
Here's how we can calculate the ending inventory and cost of goods sold for Altira Corporation:
1. Calculate the total cost of the purchased units:
- On August 8, 14,500 units were purchased at a cost of $6.40 each.
- On August 18, 8,700 units were purchased at a cost of $6.00 each.
- On August 28, 4,900 units were purchased at a cost of $5.80 each.
Total cost of purchased units = (14,500 * $6.40) + (8,700 * $6.00) + (4,900 * $5.80)
2. Calculate the cost of goods sold:
- On August 14, 11,600 units were sold at a selling price of $12.90 each.
- On August 25, 10,600 units were sold at a selling price of $11.90 each.
- Calculate the cost of goods sold using the FIFO method by using the earliest available units from the purchased inventory. Start with the August 8 purchase, then adjust with the August 18 purchase, and finally adjust with the August 28 purchase.
- Subtract the cost of goods sold from the total cost of the purchased units to calculate the ending inventory.
Note: It's important to use the earliest available units for the cost of goods sold calculation according to the FIFO method.
3. Calculate the ending inventory:
- On August 1, there were 2,900 units in the beginning inventory at a cost of $7.00 each.
- Subtract the cost of goods sold calculated above from the total cost of the purchased units to get the cost of the ending inventory.
By following these steps, you should be able to calculate the ending inventory and cost of goods sold for Altira Corporation for the month of August 2024 based on the provided information.