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Question -
a) In its first month of operations, Swifty Company made three purchases of merchandise in the following sequence: (1) 310 units at $7, (2) 470 units at $8, and (3) 230 units at $9.
Assuming there are 370 units on hand, compute the cost of the ending inventory under the (a) FIFO method and (b) LIFO method. Swifty uses a periodic inventory system.
b) In its first month of operations, Swifty Company made three purchases of merchandise in the following sequence: (1) 340 units at $8, (2) 450 units at $9, and (3) 210 units at $10. Calculate the average unit cost.
c) Compute the cost of the ending inventory under the average-cost method, assuming there are 400 units on hand.
Prepare the income statement using absorption costing. Please explain the difference in operating income between the two methods.
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