Question

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Mad Max’s Motorcycle Sales has the following activity for the month of January: 25 Motorcycles were...

Mad Max’s Motorcycle Sales has the following activity for the month of January:

25 Motorcycles were sold at $20,000 each                

                                                           

                                                                              Units        Cost/Bike   Value

Assume Beginning Inventory 1/1                               10 12,000 120,000

Purchases 1/3                                                                 5 13,000 65,000

Purchases 1/15                                                             10 14,000 140,000

Purchases 1/25                                                             10       15,000          150,000

Subtotal- Avail for Sale                                               35 475,000

Sales                                                                           (25)

End Inventory                                                              10

(Use the information to answer questions 36-40)

36.     What is the Cost of Merchandise Sold of the 25 motorcycles under FIFO?

          

a. $255,000

b. $185,000

          c. $325,000

          d. $355,000

37.     What is the Cost of Merchandise Sold under LIFO?

         a. $185,000

         b. $355,000

         c. $325,000

         d. $120,000

38.     What is the ending inventory under FIFO?

         a. $0

         b. $120,000

         c. $150,000

         d. $185,000

39.     What is the ending inventory under LIFO?

         a. $0

        b. $120,000

        c. $150,000

        d. $185,000

40.     What is the Cost of Goods Sold under the Average Cost Method?

            

         a. $475,000

         b. $500,000

         c. $275,000

         d. $339,286

Solutions

Expert Solution

36.

FIFO Method Units Rate Amount
Sale from beginning inventory      10 $ 12,000 $ 120,000
Sale from 1/3 purchase         5 $ 13,000 $    65,000
Sale from 1/15 purchase      10 $ 14,000 $ 140,000
Cost of goods sold      25 $ 325,000

Answer is C.

37.

LIFO Method Units Rate Amount
Sale from 1/25 purchase      10 $ 15,000 $ 150,000
Sale from 1/15 purchase      10 $ 14,000 $ 140,000
Sale from 1/3 purchase         5 $ 13,000 $    65,000
Cost of goods sold      25 $ 355,000

Answer is C.

38.

FIFO Method Units Rate Amount
Balance from 1/25 purchase      10 $ 15,000 $ 150,000
Ending inventory      10 $ 150,000

Answer is C.

39.

LIFO Method Units Rate Amount
Balance from beginning inventory      10 $ 12,000 $ 120,000
Ending inventory      10 $ 120,000

Answer is B.

40.

Weighted average cost per unit = value of goods available for sale / Total units available
Weighted average cost per unit = $475,000/35
Weighted average cost per unit = $13,571.429
Cost of goods sold = 25*$13,571.429
Cost of goods sold = $339,286

Answer is D.

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ekkarill92 answered 1 year ago
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