You have the following information for McBride Inc. for the month ended October

Question

You have the following information for McBride Inc. for the month ended October 31, 2012. McBride uses a periodic method for inventory.

Date Description Units Unit Cost or Selling Price Oct. 1 Beginning inventory 79 $31 Oct. 9 Purchase 157 34 Oct. 11 Sale 131 46 Oct. 17 Purchase 131 35 Oct. 22 Sale 79 52 Oct. 25 Purchase 92 38 Oct. 29 Sale 144 52 You have the following information for McBride Inc. for the month ended October 31, 2012. McBride uses a periodic method for inventory.

Date Description Units Unit Cost or Selling Price Oct. 1 Beginning inventory 79 $31 Oct. 9 Purchase 157 34 Oct. 11 Sale 131 46 Oct. 17 Purchase 131 35 Oct. 22 Sale 79 52 Oct. 25 Purchase 92 38 Oct. 29 Sale 144 52 Date Description Units Unit Cost or Selling Price LIFO FIFO AVERAGE-COST Problem 6-5A You have the following information for McBride Inc. for the month ended October 31, 2012. McBride uses a periodic method for inventory.

Date Description Units Unit Cost or Selling Price Oct. 1 Beginning inventory 79 $31 Oct. 9 Purchase 157 34 Oct. 11 Sale 131 46 Oct. 17 Purchase 131 35 Oct. 22 Sale 79 52 Oct. 25 Purchase 92 38 Oct. 29 Sale 144 52

Explanation / Answer

Let's work out the sales first.
Date Description Units Selling Price
Oct. 11 Sale 100 35; $3,500
Oct. 22 Sale 60 40; $2,400
Oct. 29 Sale 110 40; $4,400
Total: 270 units for $10,300

Now work out the rest:
Date Description Units Unit cost
Oct. 1 Beginning inventory 60 $25; $1,500
Oct. 9 Purchase 120 26; $3,120
Oct. 17 Purchase 90 27; $2,430
Oct. 25 Purchase 80 29; $2,320
Total: 350 units available; $9,370
Ending inventory 350 - 270 = 80 units

(1) LIFO
Ending inventory would come from the earliest batches, so 60 units @ $25 plus 20 units @ $26 = $2,020. COGS = $9,370 - $2,020 = $7,350.
GP = $10,300 - $7,350 = $2,950
GP rate = $2,950/10,300 = 28.6%

(2) FIFO
Ending inventory would come from the latest batches, so 80 units @ $29 = $2,320.
COGS = $9,370 - $2,320 = $7,050.
GP = $10,300 - $7,050 = $3,250
GP rate = $3,250/10,300 = 31.6%

(3) Average cost
From above, you had:
Total: 350 units available; $9,370, so average cost = $9,370/350 = $26.771

Ending inventory = 80 @ $26.771 = $2,141.70 = $2,142
COGS = $9,370 - $2,142 = $7,228.
GP = $10,300 - $7,228 = $3,072
GP rate = $3,072/10,300 = 29.8%

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.