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Sagot :
Answer:
a-i. Ending inventory = $5,800
a-ii. Ending inventory = $5,000
a-iii. Ending inventory = $5,400
b-i. Gross profit = $3,800
b-ii. Gross profit = $3,000
b-iii. Gross profit = $3,400
Explanation:
Note: This question is not complete as the sentence for the Total sales is not complete. The complete sentence of the Total sales is therefore provided before answering the question as follows:
Total sales for the year were 500 widgets sold at a retail price of $20.00 per widget.
The explanation of the answers is now provided as follows:
a) Calculate the ending inventory value under each of the following inventory methods
Ending units of inventory = 450
Therefore, we have:
a-i. Calculate the ending inventory value under first in first out (FIFO) inventory method
Ending inventory = Cost of 400 units purchased on 11/27 + Cost 50 units from 300 units purchased on 8/24 = (400 * $13) + (50 *$12) = $5,800
a-ii. Calculate the ending inventory value under Last in first out (LIFO) inventory method
Ending inventory = Cost of 100 units Beginning Inventory on 1/1 + Cost of 200 units purchased on 4/15+ Cost 150 units from 300 units purchased on 8/24 = (100 * $10) + (200 * $11) + (150 * $12) = $5,000
a-iii. Calculate the ending inventory value under Weighted Average inventory method
Cost of goods available for sale = (100 * $10) + (200 * $11) + (300 * $12) + (400 * $13) = $12,000
Units available for sale = 100 + 200 + 300 + 400 = 1,000
Weighted Average cost per unit = Cost of goods available for sale / Total units available for sale = $12,000 / 1,000 = $12
Ending inventory = Ending units of inventory * Weighted Average cost per unit = 450 * $12 = $5,400
b) Calculate the gross profit for each of the inventory methods.
Units of inventory sold = 500
Retail price per widget or unit = $20.00
Sales revenue = Units of inventory sold * Retail price per widget or unit = 500 * $20.00 = $10,000
Cost of goods available for sale = (100 * $10) + (200 * $11) + (300 * $12) + (400 * $13) = $12,000
Therefore, we have:
b-i. Calculate the gross profit under first in first out (FIFO) inventory method
Ending inventory = $5,800
Cost of goods sold = Cost of goods available for sale - Ending inventory = $12,000 - $5,800 = $6,200
Gross profit = Sales revenue – Cost of goods sold = $10,000 - $6,200 = $3,800
b-ii. Calculate the gross profit under last in first out (LIFO) inventory method
Ending inventory = $5,000
Cost of goods sold = Cost of goods available for sale - Ending inventory = $12,000 - $5,000 = $7,000
Gross profit = Sales revenue – Cost of goods sold = $10,000 - $7,000 = $3,000
b-iii. Calculate the gross profit under Weighted Average inventory method
Ending inventory = $5,400
Cost of goods sold = Cost of goods available for sale - Ending inventory = $12,000 - $5,400 = $6,600
Gross profit = Sales revenue – Cost of goods sold = $10,000 - $6,600 = $3,400
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