Question

Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 45 units from beginning inventory and 175 units from the March 5 purchase; the March 29 sale consisted of 25 units from the March 18 purchase and 65 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.)

Required information [The following information applies to the questions displayed belowj Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. Activities Units Acquired at Cost 60 units$50.20 per unit 205 units $55.20 per unit Units Sold at Retail Date Mar. 1 Beginning inventory Mar. 5 Purchase Mar. 9 Sales Mar. 18 Purchase Mar. 25 Purchase Mar. 29 Sales 220 units$85.20 per unit 65 units$60.20 per unit 110 units $62.20 per unit 90 units $95.20 per unit 310 units Totals 440 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 45 units from beginning inventory and 175 units from the March 5 purchase; the March 29 sale consisted of 25 units from the March 18 purchase and 65 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.) FIFO Gross Margin Sales Less: Cost of goods sold Gross profit LIFO Avg. Cost Spec. ID

Answer 1

Answer:

Units available for sale = 440 units

Sale of Goods available for sale = (60* $50.20) + (205* $55.20) + (65 * $60.20) + (110 * $62.20)

Cost of goods available for sale = $3,012 + $11,316 + $3,913 + $6,842

Cost of goods available for sale = $25,083

Sales = (220 * $85.20) + (90 * $95.20)

Sales = $18,744 + $8,568 = $27,312

FIFO:

Cost of goods sold = (60 * $50.20) + (205 * $55.20) + (45 * $60.20)

Cost of Goods sold = $3,012 + $11,316 + $2,709

Cost of Goods sold = $17,037

LIFO:

Cost of Goods sold = (110 * $62.20) + (65 * $60.20) + (135 * $55.20)

Cost of Goods sold = $6,842 + $3,913 + $7,452

Cost of Goods sold = $18,207

Average Cost:

Average Cost per Unit = Cost of Goods available for sale / Units available for sale

Average cost per unit = 25,083/ 440 = $57.01

Cost of Goods sold = 310 * $57.01 = $17,673

Specific Identification:

Cost of Goods sold = (45* $50.20) + (175* $55.20) + (25* $60.20) + (65 * $62.20)

Cost of Goods sold = $2,259 + $9,660 + $1,505 + $4,043

Cost of Goods sold = $17,467

Gross Margin	FIFO	LIFO	Avg Cost	Spec ID
Sales	27,312	27,312	27,312	27,312
Less: Cost of Goods sold	17,037	18,207	17,673	17,467
Gross Profit	10,275	9,105	9,639	9,845