Question

SB The inventory records for Radford...

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The inventory records for Radford Co. reflected the following:

Beginning inventory @ May 1	1,000 units @ $3.60
First purchase @ May 7	1,100 units @ $3.80
Second purchase @ May 17	1,300 units @ $3.90
Third purchase @ May 23	900 units @ $4.00
Sales @ May 31	3,300 units @ $5.50

TB MC Qu. 05-42 What is the amount of ending inventory assuming…

1. What is the amount of ending inventory assuming the FIFO cost flow method?

2. What is the amount of gross margin assuming the weighted-average inventory cost flow method? (Round your intermediate calculations to two decimal places.)

3. What is the amount of gross margin assuming the FIFO cost flow method?

Answer 1

FIFO
	Purchase			Sale			Closing Inventory
Date	Units	Rate	Total	Units	Rate	Total	Units	Rate	Total
01-May	1000	3.6	3600				1000	3.6	3600
07-May	1100	3.8	4180				1000	3.6	3600
							1100	3.8	4180
17-May	1300	3.9	5070				1000	3.6	3600
							1100	3.8	4180
							1300	3.9	5070
23-May	900	4	3600				1000	3.6	3600
							1100	3.8	4180
							1300	3.9	5070
							900	4	3600
31-May				3300	5.5	18150	100	3.9	390
							900	4	3600
1. Assuming FIFO Method, Closing Inventory is (3600+390) = 3,990
3. Gross Margin using FIFO Method
Sale Value = 18,150
Cost of Sales
(1000*3.6)		3600
(1100*3.8)		4180
(1200*3.9)		4680
Purchase Cost =		12460
Gross Margin = 18,150 - 12,460				5690
2. WAM Method
	Purchase			Sale			Closing Inventory
Date	Units	Rate	Total	Units	Rate	Total	Units	Rate	Total
01-May	1000	3.6	3600				1000	3.60	3600
07-May	1100	3.8	4180				2100	3.70	7780
17-May	1300	3.9	5070				3400	3.78	12850
23-May	900	4	3600				4300	3.83	16450
31-May				3300	5.5	18150	1000	3.83	3825.6
Sales Value =		18150
Cost of Sales =		(3300*3.83)		12639
Gross Margin : 18,150 - 12,639				5511
Answers
1	$ 3,990
2	$ 5,511
3	$ 5,690