Urban Glam Cosmetics made purchases of lipstick in the current year as follows: Jan. 1 Beginning...

Urban Glam Cosmetics made purchases of lipstick in the current year as follows:


Jan. 1 Beginning inventory	75	units	@	$	12.00	=	$	900
Mar. 14 Purchased	250	units	@	$	13.00	=		3,250
July 30 Purchased	500	units	@	$	14.00	=		7,000
Units available for sale	825	units
Cost of goods available for sale							$	11,150

Urban Glam Cosmetics made sales on the following dates at a selling price of $35 per unit:


Jan.	10	70	units
Mar.	15	180	units
Oct.	5	450	units
Totals		700	units

Solutions

Expert Solution

Caclulation of COGS Ending inventory Value & Gross Profir Under FIFO

COGS = (70 units *$12) +(5 units *$12) + (175 units * $13) + (75 units * $13) + (375* $14) = $9,400

Inventory Value = (125* $14) = $1,750

Gross Profit = Sales - COGS = (700 * $35) - $9,400 = $15,100

Caclulation of COGS Ending inventory Value & Gross Profir Moving Weighted Average.

Average Cost per unit on different date

Jan 1 = $12 (75units)

Jan 10 = $12 (units left = 75 - 70 = 5 units)

March 14 = (5*12 + 3250 )/ 5 +250 = $12.98 (units left = 5 + 250 = 255 units )

March 15 = $12.98 (units left = 255 -180 = 75 units )

July 30 = (75*12.98 + 7000) / 75 + 500 = $13.83 (75 + 500 = 575 units )

Oct 5 = $13.87 (units left = 575 -450 = 125 units )

COGS = (70 units *$12) +(180 units *$12.98) + (450 units * $13.86) = $9,417.90

Inventory Value = (125* $13.86) = $1,732.10

Gross Profit = Sales - COGS = (700 * $35) - $9,417.90= $15,082.10

ekkarill92 answered 8 months ago

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