Question

In: Accounting

Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 75 units from beginning inventory and 205 units from the March 5 purchase;

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   120 units @ $51.40 per unit        
  Mar. 5   Purchase   235 units @ $56.40 per unit        
  Mar. 9   Sales           280 units @ $86.40 per unit
  Mar. 18   Purchase   95 units @ $61.40 per unit        
  Mar. 25   Purchase   170 units @ $63.40 per unit        
  Mar. 29   Sales           150 units @ $96.40 per unit
        Totals   620 units     430 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 75 units from beginning inventory and 205 units from the March 5 purchase; the March 29 sale consisted of 55 units from the March 18 purchase and 95 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.)

Solutions

Expert Solution

Working Tables:

TAB-1 - Specific Identification Inventory Table

TAB-2 - FIFO (First In First Out)

Under this method old units are assumed to move out first and hnece closing stock consists of latest pucrhased units.Accordingly the table has been constructed hereunder

TAB-3 - LIFO (last In First out)

Under this method it is assumed that latest units move first and hence the closing inventory consists of older units.Accordingly the Inventory Table will be as hereunder :

Weighted Average (TAB-4)

Under this method the rate at which units are issued is averaged and no seggregation on basis of rate or age is done.The Inventory table will be as hereunder :

INCOME STATMENT

ekkarill92 answered 2 years ago
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