Question

During 2017, Fresh Express Company sold 2,540 units of its product on September 20 and 3,200 units on December 22, all at a price of $94 per unit. Incurring operating expenses of $18 per unit sold, it began the year with and made successive purchases of the product as follows:

January 1 beginning inventory	640	units	@	$	39	per unit
Purchases:
February 20	1,540	units	@	$	41	per unit
May 16	740	units	@	$	45	per unit
December 11	3,340	units	@	$	46	per unit
Total	6,260	units

Required:
Prepare a comparative income statement for the company, showing in adjacent columns the profits earned from the sale of the product, assuming the company uses a perpetual inventory system and prices its ending inventory on the basis of (a) FIFO and (b) Moving weighted average: (Round "Cost per unit" to 2 decimal places. Round your intermediate calculations and final answers to 2 decimal places.)

Answer 1

	LIFO	Moving Weighted Average
Sales (2540+3200)*94 =	$       5,39,560	$    5,39,560
Cost of goods sold	$       2,51,120	$    2,52,632
Gross profit	$       2,88,440	$    2,86,928
Operating expenses (5740*18)	$       1,03,320	$    1,03,320
Net operating income	$       1,85,120	$    1,83,608
WORKINGS:
Cost of goods available for sale = 640*39+1540*41+740*45+3340*46 =	$       2,75,040
Ending inventory in number of units = 6260-2540-3200 =	520
Cost of goods sold:
FIFO:
Septemeber 20 = 640*39+1540*41+360*45 =	$       1,04,300
December 22 = 380*45+2820*46 =	$       1,46,820
Total cost of goods sold	$       2,51,120
Moving weighted average:
Weighted average on May 16 = (640*39+1540*41+740*45)/(640+1540+740) =	$ 42.00
Cost of goods sold of sale on September 20 = 2540*42 =	$       1,06,680
Weighted average on December 11 = (360*42+3340*46)/(360+3340) =	$             45.61
Cost of goods sold of sale on December 22 = 3200*45.61 =	$       1,45,952
Total cost of goods sold	$       2,52,632