Question

Case Defence sells smartphone cases and uses the perpetual inventory system. The following is information on the purchases and sales of "Defender Box” cases. On October 1, Case Defence had 33 units with a unit cost of $27. Sales Units Unit Price Purchases Units Unit Cost 23 28 - 33 Date Oct. 3 Oct. 6 Oct. 12 Oct. 19 Oct. 23 Oct. 30 Oct. 31 28 33 $63 $63 43 38 $63 28 Required: 1. Calculate the dollar value of cost of goods sold and ending inventory for the month of October using the following methods. (Do not round intermediate calculations. Round weighted average all unit costs to two decimal places and round all other numbers to the nearest dollar.) Ending Inventory Cost of Goods Sold a. FIFO b. Moving weighted average

Answer 1

1. FIFO Inventory Card:

	receipts			issues			balance
	Units	Unit cost	Total	Units	Unit cost	Total	Units	Unit cost	Total
1-Oct							33	27	891
3-Oct	23	28	644				33	27	891
							23	28	644
6-Oct			0	28	27	756	5	27	135
			0			0	23	28	644
12-Oct	33	30	990			0	5	27	135
							23	28	644
							33	30	990
19-Oct				5	27	135	28	30	840
				23	28	644
				5	30	150
23-Oct	43	32	1376				28	30	840
							43	32	1376
30-Oct				28	30	840	33	32	1056
				10	32	320
31-Oct	28	33	924				33	32	1056
							28	33	924
TOTAL	127		3934	99		2845	61		1980

Weighted average Inventory card:

	receipts			issues			balance
	Units	Unit cost	Total	Units	Unit cost	Total	Units	Unit cost	Total
1-Oct							33.00	27.00	891.00
3-Oct	23	28	644				56.00	27.41	1,535.00
6-Oct			0	28.00	27.41	767.50	28.00	27.41	767.50
			0
12-Oct	33	30	990				61.00	28.81	1,757.50
19-Oct				33.00	28.81	950.78	28.00	28.81	806.72
23-Oct	43	32	1376				71.00	30.74	2,182.72
30-Oct				38.00	30.74	1,168.22	33.00	30.74	1,014.50
31-Oct	28	33	924				61.00	31.78	1,938.50
	127		3934	99.00		2,886.50	61.00		1,938.50

1.

	Inventory	cost of goods sold
a. FIFO	1980	2845
b Moving weighted avg	1938.5	2886.5

2.

	FIFO	Moving weighted avg
Sales	99*63 = 6237	6237
COGS	2845	2886.5
Gross Profit	3392	3350.50

3. a. FIFO produces Higher Gross Profit

3b. FIFO produces higher inventory balance

4. Gross Profit % =>

FIFO	3392/6237*100= 54.39%
Moving weighted avg	3350.50/6237*100 = 53.72%

Please comment in case of any query regarding the solution.