Question

Units Unit Cost or Selling Price Date Description Oct. 1 Beginning inventory Oct. 9 Purchase Oct 11 Sale Oct. 17 Purchase OctCalculate gross profit rate under each of the following methods. (1) LIFO. (2) FIFO. (3) Average-cost. (Round answers to 1 de

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Answer #1

Solution assuming the $270 per unit in Oct 17 purchase is correct

Average cost = $89.753 per unit

LIFO FIFO Average cost
The ending Inventory $                 2,610 $                 11,480 $             9,424
Cost of Goods sold $               30,150 $                 21,280 $           23,336
Gross profit $             (17,625) $                 (8,755) $        (10,811)
Gross profit rate -140.7% -69.9% -86.3%

Working

Units Cost per unit value
Beginning Balance 60 $                   24.00 $ 1,440
Purchases
140 $                   26.00 $ 3,640
95 $                 270.00 $ 25,650
70 $                   29.00 $ 2,030
Total 365 $ 32,760

.

Average Cost of Inventory
Units (A) 365
Total Cost (B) $ 32,760
Average Cost (C=B/A) $                 89.753

.

FIFO
Total Units Available for sale 365
Units Sold 260
Closing Stock in Units 105
Valuation
Ending Inventory 70 @ $             29.00 $ 2,030
35 @ $           270.00 $ 9,450
Value Of Ending Inventory $            11,480
Cost of Goods sold $            21,280
LIFO
Total Units Available for sale 365
Units Sold 260
Closing Stock in Units 105
Valuation
Ending Inventory 60 @ $             24.00 $ 1,440
45 @ $             26.00 $ 1,170
Value Of Ending Inventory $              2,610
Cost of Goods sold $            30,150
Weighted Average method
Total Units Available for sale 365
Units Sold 260
Closing Stock in Units 105
Valuation
Ending Inventory 105 @ $           89.753 $              9,424
Value Of Ending Inventory $              9,424
Cost of Goods sold (Total Purchase and opening stock Minus Closing Stock) $            23,336
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