Question

Required information [The following information applies to the questions displayed below] The following information pertains to Mason Company for 2018: Beginning inventory Units purchased 150 units 420 units @ @ $40 $43 Ending inventory consisted of 100 units. Mason sold 470 units at $86 each. All purchases and sales were made with cash. Operating expenses amounted to $3300. Required a. Compute the gross margin for Mason Company using the following cost flow assumptions: (1) FIFO, (2) LIFO, and (3) weighted average. (Round "Cost per unit" to 2 decimal places and final answers to nearest whole dollar amount.) FIFO LIFO Weighted Average Gross margin

Answer 1

	Unit	Unit Cost	Total cost
Beginning inventory	150	40	6000
Purchase	420	43	18060
Total	570		24060

a) Gross margin

	FIFO	LIFO	Weighted average
Sales	470*86 = 40420	40420	40420
Cost of goods sold	-19760	-20060	-19839
Gross profit	20660	20360	20581

b) Net income

	FIFO	LIFO	Weighted average
Gross profit	20660	20360	20581
Operating expense	-3300	-3300	-3300
Net income	17360	17060	17281

c) Calculate following

	FIFO	LIFO	Weighted average
Cash flow from operating activities
Cash inflow from customers	40420	40420	40420
Cash outflow for inventory and expense	-18060	-18060	-18060
Net cash flow from operating activities	22360	22360	22360