Question

wetome ss theewt &3 w rmasan tamw aresem AAA Co suses a periodic invemtory syem and has the following indiomato in ead to m inventory: nits 250 350 550 ait Cost Tatal Cost S10,000 14,200 24,200 20.209 S.69.600 $40 Beginning inventory Purchase on January 25 Purchase on March 15 Purchase on October 2nd 42 44 46 450 1.600 38)What is the cost of ending inventory using the weighted average method? A) $41.325. B) $28.275. C) $40,850. D) $27,950. AAA Co. sold 950 units 11 40) What is the cost of ending inventory using the FIFO method? A) $40,100. B) $42,700. C) $29,500. D) $26,900. 41) Assuming that the 950 units sold were sold at a selling price of $72 each, what is the gross profit percentage using the FIFO method? (Round final percentage amount to 1 decimal place.) A) 37.6% B) 60.7% C)41.4% D) 56.9% E) 58.6%

Answer 1

Option (B) is Correct Activity Beginning Inventory purchase purchase purchase No of units Unit cost Total Cost 250 $ 40.00 $ 10,000.00 350 $ 42.00 $ 14,700.00 550 $ 44.00 $ 24,200.00 450 $ 46.00 $ 20,700.00 Purchases Less : Sales Ending Inventory Units 1600 -950 650 $ 69,600.00 Cost of goods available for sale Average cost per Unit = $69600/1600 $ 43.50 Ending Inventory 650 units : 650 units @ $43.50 $ 28,275 Cost of Ending Inventory $ 28,275 Note : Avg cost method assumes that goods are sold at avg cost per unit Therefore, Ending inventory will also be valued at avg cost per unit Note : Round off taken upto 2 decimals

Periodic Method FIFO Method: Question 40 Option [C] is correct Date Activity Beginning Inventory 25-Jan purchase 15-Mar purchase 02-Oct purchase No of units Unit cost Total Cost 250 $ 40.00 $ 10,000.00 350 $ 42.00 $ 14,700.00 550 $ 44.00 $ 24,200.00 450 $ 46.00 $ 20,700.00 Purchases Less : Sales Ending Inventory Units 1600 -950 650 Cost of goods available for sale $ 69,600.00 Ending Inventory 650 units : 450 units @ $46 200 units @ $44 $ $ 20,700 8,800 Cost of Ending Inventory $ 29,500 Note : FIFO Method assumes that goods which are purchased first will be sold first So. Ending inventory consists of units which are purchased last

Question 41 Option [C] is correct Sales Less : Cost of goods sold Gross profit 68,400.00 40,100.00 28,300.00 $ Profit % = 28300/68400 41.4% $ Note : Cost of goods sold : Cost of goods available for sale Less; Ending inventory Cost of goods sold 69,600.00 (29,500.00) 40,100.00 ती