Question

[The following information applies to the questions displayed below.] The following information pertains to Baxter Company for 2014. Beginning inventory 70 units @ $15 Units purchased 310 units @ $18 Ending inventory consisted of 27 units. Baxter sold 353 units at $34 each. All purchases and sales were made with cash. 5. value: 0.40 points Required information Required a. Compute the gross margin for Baxter Company using the following cost flow assumptions: (1) FIFO, (2) LIFO, and (3) weighted average. (Round "Cost per unit" to 2 decimal places and final answers to

Answer 1

Number of units sold = 353
Selling Price per unit = $34

Sales Revenue = Number of units sold * Selling Price per unit
Sales Revenue = 353 * $34
Sales Revenue = $12,002

Goods available for sale:

Beginning Inventory = 70 units @ $15
Purchases = 310 units @ $18

Ending Inventory = 27 units

Answer a.

Cost of Goods Sold = 70 * $15 + 283 * $18
Cost of Goods Sold = $6,144

Gross Margin = Sales Revenue - Cost of Goods Sold
Gross Margin = $12,002 - $6,144
Gross Margin = $5,858

Answer b.

Cost of Goods Sold = 310 * $18 + 43 * $15
Cost of Goods Sold = $6,225

Gross Margin = Sales Revenue - Cost of Goods Sold
Gross Margin = $12,002 - $6,225
Gross Margin = $5,777

Answer c.

Cost of Goods available for sale = 70 * $15 + 310 * $18
Cost of Goods available for sale = $6,630

Number of units available for sale = 70 + 310
Number of units available for sale = 380

Cost per unit = Cost of Goods available for sale / Number of units available for sale
Cost per unit = $6,630 / 380
Cost per unit = $17.45

Cost of Goods Sold = 353 * $17.45
Cost of Goods Sold = $6,159.85

Gross Margin = Sales Revenue - Cost of Goods Sold
Gross Margin = $12,002 - $6,159.85
Gross Margin = $5,842.15