Question

PLEASE EXPLAIN

Maranello Inc. sells ceramic mugs. During May 2017, its inventory records for one brand of ceramic mugs were as follows:

Beginning Inventory ....................	20 mugs	@	$ 3
May 1 Purchase .....................	24 mugs	@	3.25
May 3 Sale ........................	35 mugs
May 7 Purchase ....................	57 mugs	@	3.50
May 9 Sale ........................	30 mugs

1. See information for Maranello Inc. above. Using this information, periodic FIFO cost of goods sold is

1. $211.50
2. $225.50
3. $153.75
4. None of the above

2. See information for Maranello Inc. above. Using this information, the cost of goods sold using the perpetual average cost method is (round your answer to two decimals)

1. $213.29
2. $217.20
3. $214.77
4. None of the above

Answer 1

The answer has been presented in the supporting sheet. All the parts has been solved with detailed explanation and calculation. For detailed answer refer to the supporting sheet.

1 Answer 2 3 Part 1) The correct answer is $ 211.5 4 5 6 Calculation 7 Cost of goods sold FIFO= No. of units sold *cost as per FIFO 8 (20 3)+(24*3.25) +(21*3.5) 9$211.5 10 11 Part 2) 12 The correct answer is $ 213.29 13 14 Calculation 15 Firstly we have to calculate the wieghted average cost as on 16 May 3 =(20*3)+(24*3.25))/(20+24) 173.1363 18 May 9 =((9*3.1363)+(57*3.5))/(9+57) 19 = 3.4504 20 21 Cost of goods sold -no. of units sold average cost 22 (35*3.1363)+30*3.4504 23$213.29 24