panga Group began operations early in 2021. Inventory purchase information for the quarter ended March 31,...

panga Group began operations early in 2021. Inventory purchase information for the quarter ended March 31, 2021, for Topanga’s only product is provided below. The unit costs include the cost of freight. The company uses a periodic inventory system to report inventory and cost of goods sold.

Date of Purchase	Units	Unit Cost		Total Cost
Jan. 7	9,000	$	4.00		$	36,000
Feb. 16	25,000		5.00			125,000
March 22	29,000		6.00			174,000
Totals	63,000				$	335,000

Sales for the quarter, all at $9 per unit, totaled 36,000 units leaving 27,000 units on hand at the end of the quarter.

Required:
1. Calculate Topanga's cost of goods sold for the first quarter using:

FIFO
LIFO
Average cost

2. Calculate Topanga's gross profit ratio for the first quarter using FIFO, LIFO, and Average cost.
3. Comment on the relative effect of each of the three inventory methods on the gross profit ratio.

Expert Solution

ekkarill92 answered 1 year ago

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