Question

Required information Exercise 5-4A (Algo) Effect of inventory cost flow (FIFO, LIFO, and weighted average) on gross margin LO 5-1 [The following information applies to the questions displayed below.) The following information pertains to Mason Company for Year 2: Beginning inventory Units purchased 112 units @ $ 28 350 units @ $ 42 Ending inventory consisted of 40 units. Mason sold 422 units at $84 each. All purchases and sales were made with cash. Operating expenses amounted to $3,300. Exercise 5-4A (Algo) Part a 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 3 decimal places and final answers to the nearest whole dollar amount.) FIFO Gross Margin $ 19,292 $ 18,732 LIFO Weighted average

Answer 1

FIFO Cost of goods Available for sale Cost of goods available for Units Per Unit sale 112 28 3136 Cost of goods sold FIFO Cost of goods Units Per unit sold 112 28 3136 Ending Inventory- Periodic FIFO Ending Inventor Units Per Unity 0 0 0 $ $ 40 42 1680 $ 40 1680$ Beginning Inventory Purchases Units Total 42 42 350 462 14700 17836 310 422 13020 16156 LIFO Cost of goods Available for sale Cost of goods available for Units Per Unit sale 112 28 3136 Cost of goods sold LIFO Cost of goods Units Per unit sold 72 28 2016 Ending Inventory- Periodic LIFO Ending Inventor Units Per Unity 40 28 1120$ $ 0 42 0 $ 40 1120$ Beginning Inventory Purchases Units Total 42 42 350 462 14700 17836 350 422 14700 16716 Average Cost Cost of goods Available for sale Cost of goods available for Units Per Unit sale 112 28 3136 Cost of goods sold Average Cost Ending Inventory- Average Cost Cost of Ending goods Inventor Units Per unit sold Units Per Unity Beginning Inventory Purchases Units Total 350 462 42 38.61 14700 17836 422 38.606 16292 40 38.61 1544 $ Calculation of Gross Margin Cost of goods Gross Sales sold Margin 35448 16156 35448 16716 35448 16292 FIFO LIFO Weighted Average 19292 $ 18732 $ 19156 $ Sales = 422 Units * $84 35448$ Gross Margin = Sales - Cost of goods sold

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