Question

The Green Gator Shop had the following inventory data: (Click the icon to view the inventory data.) Read the requirements. Requirement 1. Green Gator need to know the company's gross profit percentage and rate of inventory turnover for 2018 under (1) FIFO, and (2) LIFO. Begin by calculating the gross profit percentage. (Enter the percentage to the nearest tenth of a percent, X.X%.) a. FIFO b. LIFO Gross profit percentage * Data Table Requirements - X 2017 2018 1. Company managers need to know the company's gross profit percentage and rate of inventory turnover for 2018 under 1. FIFO. 2. LIFO. 2. Which method produces a higher gross profit percentage? A higher inventory turnover? Ending inventory at: FIFO Cost ....... $ 21,640 $ 31,060 LIFO Cost ......... 10,250 19,500 Cost of goods sold at: FIFO Cost $ 89,590 LIFO Cost ....... 101,150 Sales revenue .......... 144,500 Print Done

Answer 1

1.Gross profit percentage=gross profit÷sales×100

• FIFO- 54910÷144500×100=38%
• LIFO-43350÷144500×100=30%

Inventory turnover rate=cost of goods sold÷average inventory ×100

• FIFO-89590÷26350=3.4
• LIFO-101150÷14875=6.8

2.FIFO method produces higher gross profit percentage. LIFO produces higher rate of inventory turnover.