Category Quantity Cost per Unit Total Cost Category Quantity Purchased Cost per
ID: 2417084 • Letter: C
Question
Category
Quantity
Cost per Unit
Total Cost
Category
Quantity
Purchased
Cost per Unit
Quantity
Sold
Selling Price
per Unit
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(a1)
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(a2)
Norman’s Televisions produces television sets in three categories: portable, midsize, and flat-screen. On January 1, 2014, Norman adopted dollar-value LIFO and decided to use a single inventory pool. The company’s January 1 inventory consists of:Category
Quantity
Cost per Unit
Total Cost
Portable 7,000 $140 $ 980,000 Midsize 9,000 350 3,150,000 Flat-screen 3,300 560 1,848,000 19,300 $5,978,000During 2014, the company had the following purchases and sales.
Category
Quantity
Purchased
Cost per Unit
Quantity
Sold
Selling Price
per Unit
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Explanation / Answer
a1)
Price Index = Current cost / Base cost
= 7700000/6356000
= 1.2215
a2) Ending Inventory = Beginning Inventory Value at base price Index + Change in Inventory Value Base * Price Index
Beginning Inventory = 5978000*1 = 5978000
Change in Inventory = (6356000-5978000)*1.2215 = 457930
Ending Inventory = 5978000+457930
= $6435930
Cost of good sold = Opening inventory + Purchases - Ending inventory
= 5978000+18531800-6435930
= $18073870
Gross profit = Sales - Cost of good sold
= 23595600-18073870
= $5521730
End Inventory Units Current cost Base cost =7000+15700-14700 1,232,000.00 1,120,000.00 =9000+21200-25800=4400 1,848,000.00 1,540,000.00 =3300+10300-7000=6600 4,620,000.00 3,696,000.00 7,700,000.00 6,356,000.00Related Questions
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