Question

Saddlery Company sells leather saddles and equipment for horse enthusiasts. Saddlery uses the perpetual inventory system. The following schedule relates to the company’s inventory for the month of May:

						Cost		Sales
May 1		Beginning inventory		150 units		$90,000
5		Sale		100 units				$78,000
9		Purchase		50 units		$33,000
13		Purchase		200 units		$144,000
24		Sale		200 units				$168,000
27		Sale		50 units				$48,000
30		Purchase		75 units		$59,400

Calculate Saddlery Company’s cost of goods sold, gross margin, and ending inventory using FIFO.

Cost of goods sold		$Enter a dollar amount.
Gross margin		$Enter a dollar amount.
Ending Inventory		$Enter a dollar amount.

Calculate Saddlery Company’s cost of goods sold, gross margin, and ending inventory using weighted-average. (Round calculations for cost per unit to 2 decimal places, e.g. 10.52 and final answers to 0 decimal places, e.g. 61,052.)

Cost of goods sold		$Enter a dollar amount rounded to 0 decimal places.
Gross margin		$Enter a dollar amount rounded to 0 decimal places.
Ending Inventory		$Enter a dollar amount rounded to 0 decimal places.

Which cost formula produced the higher gross margin? (Round answers to 2 decimal places, e.g. 61.05%.)

		Gross Margin Ratio
FIFO		Enter percentages rounded to 2 decimal places. %
Weighted-average		Enter percentages rounded to 2 decimal places. %

Select cost formula.                                                                      FIFOWeighted-average produces the higher gross margin.

Thank you

Answer 1

Answer: