Southern Cross Company Limited made the following purchases and sales of Products A and B during the year ended December 31, 2016:
| Product A | |||
|
Units |
Unit cost/ selling price |
||
|
Jan. 07 |
Purchase #1 |
8,000 |
$12.00 |
|
Mar. 30 |
Sale #1 |
9,000 |
16.00 |
|
May 10 |
Purchase #2 |
12,000 |
12.10 |
|
Jul. 04 |
Sale #2 |
14,000 |
17.00 |
| Product B | |||
|
Units |
Unit cost/ selling price |
||
|
Jan. 13 |
Purchase #1 |
5,000 |
$13.81 |
|
Jul. 15 |
Sale #1 |
1,000 |
20.00 |
|
Oct. 23 |
Purchase #2 |
7,000 |
14.21 |
|
Dec. 14 |
Sale #2 |
8,000 |
21.00 |
Opening inventory at January 1 amounted to 4,000 units at $11.90 per unit for Product A and 2,000 units at $13.26 per unit for Product B.
Required:
- Prepare inventory record cards for Products A and B for the year using the weighted average inventory cost flow assumption.
- Calculate total cost of ending inventory at December 31, 2016.
- Assume now that Southern Cross keeps over 1,000 types of inventory on hand. Why might staff prefer to use computerized accounting software if a perpetual inventory system is used?
- (Appendix) What recommendations might you make to the president of Southern Cross regarding the use of the perpetual inventory system if only Products A and B are sold?
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