Required information
[The following information applies to the questions
displayed below.]
Warnerwoods Company uses a perpetual inventory system. It entered
into the following purchases and sales transactions for
March.
Date | Activities | Units Acquired at Cost | Units Sold at Retail | |||||||||
Mar. | 1 | Beginning inventory | 240 | units | @ $53.80 per unit | |||||||
Mar. | 5 | Purchase | 295 | units | @ $58.80 per unit | |||||||
Mar. | 9 | Sales | 400 | units | @ $88.80 per unit | |||||||
Mar. | 18 | Purchase | 155 | units | @ $63.80 per unit | |||||||
Mar. | 25 | Purchase | 290 | units | @ $65.80 per unit | |||||||
Mar. | 29 | Sales | 270 | units | @ $98.80 per unit | |||||||
Totals | 980 | units | 670 | units | ||||||||
4. Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 135 units from beginning inventory and 265 units from the March 5 purchase; the March 29 sale consisted of 115 units from the March 18 purchase and 155 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.)
Solution:
Beginning inventory + purchases = 240 + 295 + 155 + 290 = 980units
sales = 400 + 270 = 670units
Ending inventory = 980 - 670 = 310units
Sales = ( 400 x 88.8) + (270 x 98.8) = 62,196
FIFO:
Cost of goods sold = (240 x 53.8) + (295 x 58.8) + (135* x 63.8) = 12,912 + 17,346 + 8,613 = 38,871
*135 = 670 - 240 - 295
Ending inventory = (20 x 63.8) + (290 x 65.8) = 1276 + 19082 = 20,358
155 - 135 = 20
Gross profit = sales - cost of goods sold = 62,196 - 38871 = 23,325
LIFO:
Cost of goods sold = (295 x 58.8) + ( 105* x 53.8) + (270 x 65.8) = 17346 + 5649 + 17766 = 40,761
105 = 400-295
Ending inventory = (135 x 53.8) + (155 x 63.8) + (20 x 65.8) = 7263 + 9889 + 1316 = 18,468
Gross profit = sales - cost of goods sold = 62196 - 40761 = 21,435
Weighted average method:
Weighted averge perpetual | |||||||||||||
Goods purchased | Cost of goods sold | Inventory Balance | |||||||||||
Date | # of units |
Cost per unit |
# of units sold |
Cost per unit |
Cost of goods sold |
# ofunits |
Cost per unit |
Inventory Balance |
|||||
Mar-01 | 240 | @ | 53.8 | = | 12912 | ||||||||
Mar-05 | 295 | @ | 58.8 | 240 | @ | 53.8 | = | 12912 | |||||
295 | @ | 58.8 | = | 17346 | |||||||||
Average | 535 | @ | 56.56 | = | 30258 | ||||||||
Mar-09 | 400 | @ | 56.56 | = | 22624 | 135 | @ | 56.55 | = | 7634 | |||
Mar-18 | 155 | @ | 63.8 | 135 | @ | 56.55 | = | 7634 | |||||
155 | @ | 63.8 | = | 9889 | |||||||||
Average | 290 | @ | 60.42 | = | 17523 | ||||||||
Mar-25 | 290 | @ | 65.8 | 135 | @ | 56.55 | = | 7634 | |||||
155 | @ | 63.8 | = | 9889 | |||||||||
290 | @ | 65.8 | = | 19082 | |||||||||
580 | @ | 63.11 | = | 36605 | |||||||||
Mar-29 | 270 | @ | 63.11 | = | 17039.7 | 310 | @ | 63.11 | = | 19565.3 | |||
Totals | 39663.7 | 19565.3 |
Gross profit = sales - cost of goods sold = 62,196 - 39664 = 22,532
Specific identification:
Cost of goods sold = (135 x 53.8 ) + (265 x 58.8 ) + (115 x 63.8 ) + (155 x 65.8) = 7263 + 15,582 + 7337 + 10,199 = 40,381
Ending inventory = (105 x 53.8) + (30 x 58.8) + (40 x 63.8) + (135 x 65.8) = 5649 + 1764 + 2552 + 8883 = 18,848
Gross profit = sales - cost of goods sold = 62,196 - 40381 = 21,815
Required information [The following information applies to the questions displayed below.] Warnerwoods Company uses a perpetual...
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