Question

A company had the following related to inventory during its first year of business: (Click the icon to view the sales and purchases.) More Info The company uses a periodic inventory system. (1) Using FIFO inventory costing: = Gross profit January 5 February 15 April 10 June 30 August 15 November Purchased 35 units at $105 each Sold 10 units at $140 each Sold 15 units at $140 each Purchased 40 units at $120 each Sold 35 units at $140 each Purchased 45 units at $125 each (ii) Using LIFO inventory costing: 28 = Gross profit Print Done (iii) Using weighted average inventory costing: (For calculations round cost per unit to the nearest cent. Round all other amounts to the nearest dollar.) = Gross profit

Answer 1

	Unit	Unit Cost	Total Cost
Purchase 1	35	105	3675
Purchase 2	40	120	4800
Purchase 3	45	125	5625
Total	120		14100

Sale unit = 10+15+35 = 60 Units

i) FIFO

Sales revenue	-	Cost of goods sold	=	Gross profit
60*140 = 8400	-	(3675+25*120) = 6675	=	1725

ii) LIFO

Sales revenue	-	Cost of goods sold	=	Gross profit
60*140 = 8400	-	(5625+15*120) = 7425	=	975

iii) Average cost

Sales revenue	-	Cost of goods sold	=	Gross profit
60*140 = 8400	-	14100/120*60 = 7050		1350