Cost-flow assumptions—FIFO and LIFO using a periodic system Mower- Blower Sales Co. started business on January 20, 2010. Products sold were snow blowers and lawn mowers. Each product sold for $350. Purchases during 2010 were as follows:
| Blowers | Mowers |
January 21 | 20 @ $200 |
|
February 3 | 40 @ 195 |
|
February 28 | 30 @ 190 |
|
March 13 | 20 @ 190 |
|
April 6 |
| 20 @ $210 |
May 22 |
| 40 @ 215 |
June 3 |
| 40 @ 220 |
June 20 |
| 60 @ 230 |
August 15 |
| 20 @ 215 |
September 20 |
| 20 @ 210 |
November 7 | 20 @ 200 |
|
The December 31, 2010, inventory included 10 blowers and 25 mowers. Assume the company uses a periodic inventory system.
Required:
a. What will be the difference between ending inventory valuation at December 31, 2010, and cost of goods sold for 2010, under the FIFO and LIFO cost-flow assumptions? (Hint: Compute ending inventory and cost of goods sold under each method, and then compare results.)
b. If the cost of mowers had increased to $240 each by December 1, and if management had purchased 30 mowers at that time, which cost-flow assumption was probably being used by the firm? Explain your answer.
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.