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

120

units

@ $10.80

=

$

1,296

Jan.

10

Sales

110

units

@ $40.80

Mar.

14

Purchase

270

units

@ $15.80

=

4,266

Mar.

15

Sales

160

units

@ $40.80

July

30

Purchase

420

units

@ $20.80

=

8,736

Oct.

5

Sales

280

units

@ $40.80

Oct.

26

Purchase

620

units

@ $25.80

=

15,996

Totals

1,430

units

$

30,294

550

units

Required:

Hemming uses a perpetual inventory system.

3.

value:
8.33 points

Required information

Determine the costs assigned to ending inventory and to cost of goods sold using FIFO. Determine the costs assigned to ending inventory and to cost of goods sold using LIFO. Determine the costs assigned to ending inventory and to cost of goods sold using LIFO. Compute the gross margin for FIFO method.      Compute the gross margin for LIFO method.

Answer 1

Answer a.

FIFO:

Ending Inventory = $21,404
Cost of Goods Sold = $8,890

Answer b.

LIFO:

Ending Inventory = $20,754
Cost of Goods Sold = $9,540

Answer c.

Sales = 550 * $40.80
Sales = $22,440

FIFO:

Gross Profit = Sales - Cost of Goods Sold
Gross Profit = $22,440 - $8,890
Gross Profit = $13,550

LIFO:

Gross Profit = Sales - Cost of Goods Sold
Gross Profit = $22,440 - $9,540
Gross Profit = $12,900