Question

Required information [The following information applies to the questions displayed below. The following information pertains to Mason Company for 2018: Beginning inventory Units purchased 150 units 410 units @ @ $70 $73 Ending inventory consisted of 100 units. Mason sold 460 units at $146 each. All purchases and sales were made with cash. Operating expenses amounted to $2700 Required a. Compute the gross margin for Mason Company using the following cost flow assumptions: (1) FIFO, (2) LIFO, and (3) weighted average. (Round "Cost per unit" to 2 decimal places and final answers to nearest whole dollar amount.) FIFO LEO LIFO Weighted Gross margin

Answer 1

(1). Computation of Gross Margin under FIFO Method: Cost of Goods Sold = (150 Units x $70) + (310 Units x $73) = $33,130.00 Gross Margin = Sales Revenue - Cost of Goods Sold = (460 x $146) - $33,130 = $34,030.00 (2). Computation of Gross Margin under LIFO Method: Cost of Goods Sold = (410 Units x $73)+ (50 Units x $70) = $33,430.00 Gross Margin = Sales Revenue - Cost of Goods Sold = (460 x $146) - $33,430 = $33,730.00 (3). Computation of Gross Margin under Weighted Average Method: Calculation of Weighted Average Cost Per Unit: = ((150 x $70)+(410 x $73))/(150+410) = $72.20 Cost of Goods Sold = 460 Units x $72.20 = $33,212.00 Gross Margin = Sales Revenue - Cost of Goods Sold = (460 x $146) - $33,212 = $33,948.00