Question

Cast Iron Grills, Inc., manufactures premium gas barbecue grills. The company reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. Cast Iron's December 31, 2021, fiscal year-end inventory consisted of the following (listed in chronological order of acquisition): Units 7,400 5,200 8,400 Unit Cost $ 900 1,000 1,100 The replacement cost of the grills throughout 2022 was $1,200. Cast Iron sold 39,000 grills during 2022. The company's selling price is set at 200% of the current replacement cost. Required: 1. & 2. Compute the gross profit (sales minus cost of goods sold) and the gross profit ratio for 2022 under two different assumptions. First, that Cast Iron purchased 40,000 units and, second, that Cast Iron purchased 21,000 units during the year. 4. Compute the gross profit (sales minus cost of goods sold) and the gross profit ratio for 2022 assuming that Cast Iron purchased 40,000 units (as per the first assumption) and 21,000 units (as per the second assumption) during the year and uses the FIFO inventory cost method rather than the LIFO method. Complete this question by entering your answers in the tabs below. Req 1 and 2 Reg 4 Compute the gross profit (sales minus cost of goods sold) and the gross profit ratio for 2022 assuming that Cast Iron purchased 40,000 units (as per the first assumption) and 21,000 units (as per the second assumption) during the year and uses the FIFO inventory cost method rather than the LIFO method. (Round "Gross profit ratio" answer to 1 decimal place (i.e., 0.123 needs to be entered as 12.3%.)) Show less Gross Profit Gross Profit Ratio Purchased Units 40,000 21,000 < Req 1 and 2 Reg 4 >

Answer 1

1&2

	Cost of goods sold (40000 units)			Cost of goods sold (21000 units)
Activity	Units	Unit Price	Amount	Units	Unit Price	Amount
Purchase	39000	$           1,200.00	$       4,68,00,000	21000	$      1,200.00	$ 2,52,00,000
Beginning Inventory				8400	$      1,100.00	$      92,40,000
				5200	$      1,000.00	$      52,00,000
				4400	$      1,000.00	$      44,00,000
Total	39000		$       4,68,00,000	39000		$ 4,40,40,000
Purchased units	40000	21000
Sales	$     9,36,00,000	$      9,36,00,000
Cost of Goods sold	$     4,68,00,000	$      4,40,40,000
Gross Profit	$     4,68,00,000	$     4,95,60,000
Gross Profit (%)	50.00%	52.95%

4.

	Cost of goods sold (40000 units)			Cost of goods sold (21000 units)
Activity	Units	Unit Price	Amount	Units	Unit Price	Amount
Purchase	18000	$           1,200.00	$       2,16,00,000	18000	$      1,200.00	$ 2,16,00,000
Beginning Inventory	8400	$           1,100.00	$           92,40,000	8400	$      1,100.00	$      92,40,000
	5200	$           1,000.00	$           52,00,000	5200	$      1,000.00	$      52,00,000
	7400	$           1,000.00	$           74,00,000	7400	$      1,000.00	$      74,00,000
Total	39000		$       4,34,40,000	39000		$ 4,34,40,000
Purchased units	40000	21000
Sales	$     9,36,00,000	$      9,36,00,000
Cost of Goods sold	$     4,34,40,000	$      4,34,40,000
Gross Profit	$     5,01,60,000	$     5,01,60,000
Gross Profit (%)	53.59%	53.59%