Question

Required information [The following information applies to the questions displayed below.] Warnerwoods Company uses a perpetual inventory system. It entered into the following purchases and sales transactions for March. Units Sold at Retail Units Acquired at Cost 90 units @ $50.80 per unit 220 units @ $55.80 per unit 250 units @ $85.80 per unit Date Activities Mar. 1 Beginning inventory Mar. 5 Purchase Mar. 9 Sales Mar. 18 Purchase Mar. 25 Purchase Mar. 29 Sales Totals 80 units @ $60.80 per unit 140 units @ $62.80 per unit 120 units @ $95.80 per unit 370 units 530 units 4. Compute gross profit earned by the company for each of the four costing methods. For specific identification, the March 9 sale consisted of 60 units from beginning inventory and 190 units from the March 5 purchase; the March 29 sale consisted of 40 units from the March 18 purchase and 80 units from the March 25 purchase. (Round weighted average cost per unit to two decimals and final answers to nearest whole dollar.) Gross Margin FIFO LIFO Avg. Cost S pec. ID Sales Less: Cost of goods sold Gross profit

Answer 1

FIFO Method Cost of Goods Sold Rate Qty Amount Qty Date Mar-01 Mar-05 Cost of Goods available for Sale Qty Rate Amount 90 $ 50.80 $ 4,572.00 220 $ 55.80 $ 12,276.00 Amount 4,572.00 4,572.00 12,276.00 Mar-09 90 $ 160 $ 50.80 $ 55.80 $ 4,572.00 8,928.00 Mar-18 80 $ 60.80 $ 4,864.00 Inventory Balance Rate 90 $ 50.80 $ 90 $ 50.80 $ 220 $ 55.80 $ 0 $ 50.80 $ 60 $ 55.80 $ 60 $ 55.80 $ 60.80 $ 55.80 $ 80 $ 60.80 $ 140$ 62.80 $ 20 $ 60.80 $ 140 $ 62.80 $ $ Mar-25 140 $ 62.80 $ 80 S 60 $ 8,792.00 3,348.00 3,348.00 4,864.00 3,348.00 4,864.00 8,792.00 1,216.00 8,792.00 10,008.00 Mar-29 60 $ 60 $ 370 55.80 60.80 $ $ $ 3,348.00 3,648.00 20,496.00 $ 30,504.00 160

LIFO Method Cost of Goods Sold Rate Qty Amount Qty Date Mar-01) Mar-05 Cost of Goods available for Sale Qty Rate Amount 90 $ 50.80 $ 4,572.00 220 $ 55.80 $ 12,276.00 Amount 4,572.00 4,572.00 12,276.00 3,048.00 Mar-09 220 $ 30 $ 55.80 50.80 $ $ 12,276.00 1,524.00 Mar-18 80 $ 60.80 $ 4,864.00 Inventory Balance Rate 90 $ 50.80 $ 90 $ 50.80 $ 220$ 55.80 $ 60 $ 50.80 $ 0 $ 55.80 $ 50.80 $ 80$ 60.80 $ 60 $ 50.80 $ 80 $ 60.80 $ 140 $ 62.80 $ 60 $ 50.80 $ 80 $ 60.80 $ 20 $ 62.80 $ 160 $ bols Mar-25 140 $ 62.80 $ 8,792.00 3,048.00 4,864.00 3,048.00 4,864.00 8,792.00 3,048.00 4,864.00 1,256.00 9,168.00 Mar-29 120 $ 62.80 $ 7,536.00 $ 30,504.00 370 $ 21,336.00

Weighted Average Method Cost of Goods available for Sale Date Qty Rate Amount Mar-01) 90 $ 50.80 $ 4,572.00 Mar-05 220 $ 55.80 $ 12,276.00 Cost of Goods Sold Rate Qty Amount Qty Average 250 $ 54.35 $ 13,587.10 Mar-09 Mar-18 80 $ 60.80 $ 4,864.00 Inventory Balance Rate 90 $ 50.80 $ 90 $ 50.80 $ 220 $ 55.80 $ 310 $ 54.35 $ 60 $ 54.35 $ 60 $ 54.35 $ 80$ 60.80 $ 140 $ 58.04 $ 140 $ 58.04 $ 140 $ 62.80 $ 280$ 60.42 $ 160 $ 60.42 $ 160 $ 60.42 $ Amount 4,572.00 4,572.00 12,276.00 16,848.00 3,260.90 3,260.90 4,864.00 8,124.90 8,124.90 8,792.00 16,916.90 9,666.80 9,666.80 Average Mar-25 140 $ 62.80 $ 8,792.00 Average Mar-29 120 $ 60.42 $ $ 7,250.10 20,837.20 530 $ 30,504.00 370

Specific Identification Method Cost of Goods available for Sale Date Qty Rate L Amount Mar-01 90 $ 50.80 $ 4,572.00 Mar-05 220 $ 55.80 $ 12,276.00 Cost of Goods Sold Rate Qty Amount Qty 220 $ Mar-09 60 $ 190 $ 50.80 55.80 $ $ 3,048.00 10,602.00 30 $ Mar-18 80 $ 60.80 $ 4,864.00 Inventory Balance Rate 90 $ 50.80 $ 90 $ 50.80 $ 55.80 $ 30 $ 50.80 $ 55.80 $ 30 $ 50.80 $ 30 $ 55.80 $ 60.80 $ 50.80 $ 30 $ 55.80 $ 80 $ 60.80 $ 62.80 $ 30 $ 50.80 $ 55.80 $ 60.80 $ 62.80 $ 160 $ Amount 4,572.00 4,572.00 12,276.00 1,524.00 1,674.00 1,524.00 1,674.00 4,864.00 1,524.00 1,674.00 4,864.00 8,792.00 1,524.00 1,674.00 2,432.00 3,768.00 9,398.00 Mar-25 140 $ 62.80 $ 8,792.00 Mar-29 40 $ 80 $ 60.80 62.80 $ $ 2,432.00 5,024.00 is 40 S 530 $ 30,504.00 370 $ 21,106.00

Sales = (250 * $85.80) + (120 * $95.80) = $32,946

Gross Margin Sales Less: Cost of goods sold Gross Profit FIFO 32,946.00 $ 20,496.00 $ 12,450.00 $ LIFO Avg. cost 32,946.00 $ 32,946.00 $ 21,336.00 $ 20,837.20 $ 11,610.00 $ 12,108.80 $ Spec.ID 32,946.00 21,106.00 11,840.00