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Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions...

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 200 units @ $53.00 per unit
Mar. 5 Purchase 275 units @ $58.00 per unit
Mar. 9 Sales 360 units @ $88.00 per unit
Mar. 18 Purchase 135 units @ $63.00 per unit
Mar. 25 Purchase 250 units @ $65.00 per unit
Mar. 29 Sales 230 units @ $98.00 per unit
Totals 860 units 590 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 115 units from beginning inventory and 245 units from the March 5 purchase; the March 29 sale consisted of 95 units from the March 18 purchase and 135 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

4) The gross profit under the four method of valuation are:
a) FIFO: Calculation Amount $
SALES: 360*88 31680
230*98 22540
Total Sales 54220
Less: COGS:
200*53 10600
160*58 9280
115*58 6670
115*63 7245
Total COGS 33795
Gross Profit 20425
b) LIFO: Amount $
SALES: 360*88 31680
230*98 22540
Total Sales 54220
Less: COGS:
275*58 15950
85*53 4505
230*65 14950
Total COGS 35405
Gross Profit 18815
c) Average Method: Amount $
SALES: 360*88 31680
230*98 22540
Total Sales 54220
Less: COGS:
(200*53+275*58+135*63+250*65)*590/860 35198
Gross Profit 19022
d) Specific Identification: Amount $
SALES: 360*88 31680
230*98 22540
Total Sales 54220
Less: COGS:
March 9 sales: 115*53 6095
245*58 14210
March 29 sales: 95*63 5985
135*65 8775
Total COGS 35065
Gross Profit 19155

ekkarill92 answered 5 months ago
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