Question

0 Required information (The following information applies to the questions displayed below.) The following information pertains to Mason Company for Year 2: Beginning inventory Units purchased 140 units @ $ 42 486 units @ $63 Ending inventory consisted of 54 units. Mason sold 492 units at $126 each. All purchases and sales were made with cash. Operating expenses amounted to $3,825. c. Compute the amount of ending inventory using (1) FIFO, (2) LIFO, and (3) weighted average. (Round cost per unit to 3 decimal places and final answers to the nearest whole dollar amount.) Ending Inventory FIFO LIFO Weighted average

Answer 1

a. Gross Margin

Methods	Gross Margin
FIFO	$33,936
LIFO	$32,802
Weighted average	$33,645

Working Notes:

(i) Sales = 492 Units * $126 = $61,992

(ii) Cost of goods sold

FIFO = (140 Units * $42) + (492 Units - 140 Units) * $63 = $28,056

LIFO = (406 Units * $63) + (492 Units - 406 Units) $42 = $29,190

Weighted average cost per unit = (140 Units * $42) + (406 Units * $63) / 546 Units = $57.615 per unit

= 492 Units * $57.615

= $28,347

(iii) Gross Margin

Gross Margin = Sales - Cost of goods sold

FIFO = $61,992 - $28,056 = $33,936

LIFO = $61,992 - $29,190 = $32,802

Weighted Average = $61,992 - $28,347 = $33,645

b. Amount of Ending Inventory

Methods	Ending Inventory
FIFO	$3,402
LIFO	$2,268
Weighted average	$31,112

Working Notes:

Ending Inventory = Goods available for sale - Goods sold

Goods available for sale = 140 Units + 406 Units = 546 Units

Ending Inventory = 546 Units - 492 Units = 54 Units

Amount of Ending Inventory

FIFO = 54 Units * $63 = $3,402

LIFO = 54 Units * $42 = $2,268

Weighted Average = 54 Units * $57.615 = $31,112

All the best...