Question

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

160

units

@ $52.20 per unit

Mar.

5

Purchase

255

units

@ $57.20 per unit

Mar.

9

Sales

320

units

@ $87.20 per unit

Mar.

18

Purchase

115

units

@ $62.20 per unit

Mar.

25

Purchase

210

units

@ $64.20 per unit

Mar.

29

Sales

190

units

@ $97.20 per unit

Totals

740

units

510

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 95 units from beginning inventory and 225 units from the March 5 purchase; the March 29 sale consisted of 75 units from the March 18 purchase and 115 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.)

Answer 1

Calculation of Gross Profit Earned by the Company using FIFO perpetual inventory system
Sales
- 320 Units x $87.20	$27,904
- 190 Units x $97.20	$18,468
Total Sales		$46,372
Less : Cost of goods sold
- 160 Units x $52.20	$8,352
- 160 Units x $57.20	$9,152
- 95 Units x $57.20	$5,434
- 95 Units x $67.20	$6,384
Total Cost of Goods sold		$29,322
Gross Profit as per FIFO		$17,050
Calculation of Gross Profit Earned by the Company using LIFO perpetual inventory system
Sales
- 320 Units x $87.20	$27,904
- 190 Units x $97.20	$18,468
Total Sales		$46,372
Less : Cost of goods sold
- 255 Units x $57.20	$14,586
- 65 Units x $52.20	$3,393
- 190 Units x $64.20	$12,198
Total Cost of Goods sold		$30,177
Gross Profit as per LIFO		$16,195
Calculation of Gross Profit Earned by the Company using Weighted Average inventory system
Sales
- 320 Units x $87.20	$27,904
- 190 Units x $97.20	$18,468
Total Sales		$46,372
Less : Cost of goods sold
- 320 Units x $55.27	$17,686
- 190 Units x $61.63	$11,710
Total Cost of Goods sold		$29,396
Gross Profit as per Weighted Average		$16,976
Weighted Average cost per unit for Mar.9 Sales = $22938 / 415 Units = $55.27 per unit
Weighted Average cost per unit for Mar.29 Sales = $25887 / 420 units = $61.63 per unit
Calculation of Gross Profit Earned by the Company using Specific Identification inventory system
Sales
- 320 Units x $87.20	$27,904
- 190 Units x $97.20	$18,468
Total Sales		$46,372
Less : Cost of goods sold
- 95 Units x $52.20	$4,959
- 225 Units x $57.20	$12,870
- 75 Units x $62.20	$4,665
- 115 Units x $64.20	$7,383
Total Cost of Goods sold		$29,877
Gross Profit as per Specific Identification		$16,495