Question

1 Problem 6-3A Perpetual: Alternative cost flows P1 Montoure Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions. (For specific identification, units sold consist of 600 units from beginning inventory, 300 from the February 10 purchase, 200 from the March 13 purchase, 50 from the August 21 purchase, and 250 from the September 5 purchase.) Date Activities Units Acquired at Cost Units Sold at Retail Jan. Beginning inventory 600 units o $45.00 per unit Feb. 10 Purchase.. 400 units $42.00 per unit Mar. 13 Purchase 200 unts @ $27.00 per unit Mar. 15 Sales 800 units a $75.00 per unit Aug. 21 Purchase 100 units $50.00 per unit Sep. 5 Purchase 500 units o$46.00 per unit Sep. 10 Sales 600 units $75.00 per unit Totals 1.800 units 1.400 units Required 1. Compute cost of goods available for sale and the number of units available for sale. 2. Compute the number of units in ending inventory 3. Compute the cost assigned to ending inventory using (a) FIFO, (6) LIFO, (e) weighted average, and (d) specific identification. (Round all amounts to cents.) Check (3) Ending inventory: FIFO, S18,400; LIFO, $18,000: WA $17,760 4. Compute gross profit earned by the company for each of the four costing methods in part 3. (4) LIFO gross profit, $45,800 Analysis Component 5. The company's manager earns a bonus based on a percent of gross profit. Which method of inventory costing produces the highest bonus fo the manager?

Answer 1

5) Manager will opt for FIFO method as it is giving the highest gross profit of 46200 which will lead to increased bonus.

working Note :-

Ending FIFO inventory consists of 400 units purchased on sept 5 , Ending LIFO inventory Consists of 400 units from beginning inventory and weighted average cost is 42.89 ( 77200 / 1800 )

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- 0 Х X Microsoft Excel (Product Activation Failed) - Master.xlsx A С D B E F G H K L M N o Р Q R S 120 121 1) Cost Of Goods Available For sale :- 122 123 27000 Beginning Inventory Purchases (600*45) 400*42 + 200*27 + 100*50+500 *46) 124 Add :- 50200 125 126 Cost Of Goods Available For Sale 77200 127 128 2) Number of Units in ending Inventory :- 129 130 600 131 Add :- Less :- Beginning Inventory Purchases Sales 1200 -1400 132 133 134 Units in ending Inventory 400 135 136 3) Ending Inventory Cost :- LIFO FIFO Units 137 Units Rate Rate 46 Weighted Average Units Rate 400 42.89 400 400 45 138 139 Specific ID Units Rate 100 42 50 50 250 46 140 141 142 18400 18000 17156 18200 143 144 4) Gross Profit :- (Sales - COGS) FIFO LIFO 145 146 Weighted Average 105000 Specific ID 105000 Sales ( 1400 *75 ) 105000 105000 147 148 Less :- COGS 60044 (Cost of goods available for sale - Ending Inventory) 58800 (77200 - 18400) 59200 (77200 - 18000) 59000 ( 77200 - 18200) 149 (77200 - 17156) 150 151 Gross Profit 46200 45800 44956 46000 152 KI Vertical Analysis WACC IRR (2) IRR back Ratio STD Dev III Bonds Inventory NPV Capital adequacy Ratio O Type here to search g e W ENG 09:27 UKX 18-09-2020