Question

Hemming Co. reported the following current-year purchases and sales for its only product.

  

Date

Activities

Units Acquired at Cost

Units Sold at Retail

Jan.

1

Beginning inventory

140

units

@ $11.60

=

$

1,624

Jan.

10

Sales

130

units

@ $41.60

Mar.

14

Purchase

290

units

@ $16.60

=

4,814

Mar.

15

Sales

180

units

@ $41.60

July

30

Purchase

440

units

@ $21.60

=

9,504

Oct.

5

Sales

260

units

@ $41.60

Oct.

26

Purchase

640

units

@ $26.60

=

16,250

Totals

1,510

units

$

32,966

570

units

  
Required:

Hemming uses a perpetual inventory system. (Round cost per unit to 2 decimal places.)

   

(a) Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.

(b) Determine the costs assigned to ending inventory and to cost of goods sold using LIFO.

(c) Compute the gross margin for each method.

a) Perpetual FIFO: Goods Purchased Cost of Goods Sold Inventory Balance Date # of units Cost per unit # of units sold Cost per unit Cost of Goods Sold # of units Cost per unit Inventory Balance January 1 January 10 March 14 March 15 July 30 October 5 October 26 = Totals

*Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted.

a) Perpetual LIFO: Goods Purchased Cost of Goods Sold Inventory Balance Date # of units Cost per unit # of units sold Cost per unit Cost of Goods Sold # of units Cost per unit Inventory Balance January 1 January 10 March 14 March 15 July 30 October 5 October 26 = Totals

*Red text indicates no response was expected in a cell or a formula-based calculation is incorrect; no points deducted.

Answer 1

Ans.				FIFO	LIFO
	Cost assigned to ending inventory			23504	22854
	Cost of goods sold			9462	10112
	FIFO:
	Date	Units	Cost per unit	Total cost	Units	Cost per unit	Total cost	Units	Cost per unit	Total cost
	1-Jan							140	11.6	1624
	10-Jan				130	11.6	1508	10	11.6	116
	14-Mar	290	16.6	4814				10	11.6	116
								290	16.6	4814
	15-Mar				10	11.6	116
					170	16.6	2822	120	16.6	1992
	30-Jul	440	21.6	9504				120	16.6	1992
								440	21.6	9504
	5-Oct				120	16.6	1992
					140	21.6	3024	300	21.6	6480
	26-Oct	640	26.6	17024				300	21.6	6480
								640	26.6	17024
	Totals				570		9462	940		23504
	LIFO:
	Date	Units	Cost per unit	Total cost	Units	Cost per unit	Total cost	Units	Cost per unit	Total cost
	1-Jan							140	11.6	1624
	10-Jan				130	11.6	1508	10	11.6	116
	14-Mar	290	16.6	4814				10	11.6	116
								290	16.6	4814
	15-Mar				180	16.6	2988	10	11.6	116
								110	16.6	1826
	30-Jul	440	21.6	9504				10	11.6	116
								110	16.6	1826
								440	21.6	9504
	5-Oct				260	21.6	5616	10	11.6	116
								110	16.6	1826
								180	21.6	3888
	26-Oct	640	26.6	17024				10	11.6	116
								110	16.6	1826
								180	21.6	3888
								640	26.6	17024
	Totals				570		10112	940		22854