ANSWER = 1 | ||||||||||
FIFO METHOD: | ||||||||||
PURHASES | COST OF GOODS SOLD | ENDING INVENTORY | ||||||||
Date | Particulars | Units | Rate | Total | Units | Rate | Total | Units | Rate | Total |
Feb, 01 | Beginning inventory | 7100 | $ 21.00 | $1,49,100 | ||||||
Feb, 10 | Sales | 6000 | $ 21.00 | $1,26,000 | 1100 | $ 21.00 | $23,100 | |||
Feb, 14 | Purchases | 3900 | $ 22.00 | $85,800 | 1100 | $ 21.00 | $23,100 | |||
3900 | $ 22.00 | $85,800 | ||||||||
Feb, 18 | Purchases | 600 | $ 25.00 | $15,000 | 1100 | $ 21.00 | $23,100 | |||
3900 | $ 22.00 | $85,800 | ||||||||
600 | $ 25.00 | $15,000 | ||||||||
Feb, 25 | Sales | 1100 | $ 21.00 | $23,100 | ||||||
2500 | $ 22.00 | $55,000 | 1400 | $ 22.00 | $30,800 | |||||
600 | $ 25.00 | $15,000 | ||||||||
Feb, 26 | Purchases | 4100 | $ 30.00 | $1,23,000 | 1400 | $ 22.00 | $30,800 | |||
600 | $ 25.00 | $15,000 | ||||||||
4100 | $ 30.00 | $1,23,000 | ||||||||
Feb, 28 | Sales | 1400 | $ 22.00 | $30,800 | ||||||
600 | $ 25.00 | $15,000 | ||||||||
1100 | $ 30.00 | $33,000 | 3000 | $ 30.00 | $90,000 | |||||
8,600 | $2,23,800 | 12,700 | $2,82,900 | 3000 | $90,000 | |||||
ANSWER: 1 | ||||||||||
Cost of Goods Sold | $2,82,900 | |||||||||
ANSWER: 2 | ||||||||||
Gross Margin | ||||||||||
Sales Value (12,700 Units X $ 87) | 11,04,900 | |||||||||
Less: Cost of Goods Slold | $2,82,900 | |||||||||
Gross Margin | $8,22,000 | |||||||||
ANSWER: 3 | ||||||||||
Ending inventory | 90,000 | |||||||||
ANSWER = 2 | ||||||||||
WEIGHTED AVERAGE METHOD | ||||||||||
PURHASES | COST OF GOODS SOLD | ENDING INVENTORY | ||||||||
Date | Particulars | Units | Rate | Total | Units | Rate | Total | Units | Rate | Total |
Feb, 01 | Beginning inventory | 7100 | $ 21.00 | $1,49,100 | ||||||
Feb, 10 | Sales | 6000 | $ 21.00 | $1,26,000 | 1100 | $ 21.00 | $23,100 | |||
Feb, 14 | Purchases | 3900 | $ 22.00 | $85,800 | 5000 | $ 21.78 | $1,08,900 | |||
Feb, 18 | Purchases | 600 | $ 25.00 | $15,000 | 5600 | $ 22.13 | $1,23,900 | |||
Feb, 25 | Sales | 3600 | $ 22.13 | $79,650 | 2000 | $ 22.13 | $44,250 | |||
Feb, 26 | Purchases | 4100 | $ 30.00 | $1,23,000 | 6100 | $ 27.42 | $1,67,250 | |||
Feb, 28 | Sales | 3100 | $ 27.42 | $84,996 | 3000 | $ 27.42 | $82,254 | |||
8,600 | $2,23,800 | 12,700 | $2,90,646 | 3000 | $82,254 | |||||
ANSWER: 1 | ||||||||||
Cost of Goods Sold | $2,90,646 | |||||||||
ANSWER: 2 | ||||||||||
Gross Margin | ||||||||||
Sales Value (12,700 Units X $ 87) | 11,04,900 | |||||||||
Less: Cost of Goods Slold | $2,90,646 | |||||||||
Gross Margin | $8,14,254 | |||||||||
ANSWER: 3 | ||||||||||
Ending inventory | 82,254 | |||||||||
ANSWER = 3 | ||||||||||
FIFO Method results is higher gross margin | ||||||||||
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