Montoure Company uses a perpetual inventory system. It entered into the followin

Question

Montoure Company uses a perpetual inventory system. It entered into the following calendar-year 2015 purchases and sales transactions.

1.

Compute cost of goods available for sale and the number of units available for sale.

Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification units sold consist of 600 units from beginning inventory, 380 from the February 10 purchase, 120 from the March 13 purchase, 130 from the August 21 purchase, and 205 from the September 5 purchase. (Round your average cost per unit to 2 decimal places.)

4.

Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places.)

Montoure Company uses a perpetual inventory system. It entered into the following calendar-year 2015 purchases and sales transactions.

Explanation / Answer

1) Cost of goods available for sale Quantity Rate per Total units unit 1-Jan Beginning inventory 600 60 36000 10-Feb Purchase 480 57 27360 13-Mar Purchase 120 42 5040 21-Aug Purchase 180 65 11700 5-Sep Purchase 470 63 29610 Total 1850 109710 2) Number of units in ending inventory = Total quantity available for sale - Units sold = 1850 - 1435 = 415 units 3) Cost assigned to ending inventory based on a) FIFO 5-Sep Purchase 415 63 26145 b) LIFO 1-Jan Beginning inventory 415 60 24900 c) Weighted average = 109710 /1850                       = 59.30 Cost of ending inventory = 415 * 59.30                               = 24609.50 d) specific identification 10-Feb Purchase 100 57 5700 21-Aug Purchase 50 65 3250 5-Sep Purchase 265 63 16695 415 25645 4) Cost of goods sold a) FIFO 1-Jan Beginning inventory 600 60 36000 10-Feb Purchase 480 57 27360 13-Mar Purchase 120 42 5040 21-Aug Purchase 180 65 11700 5-Sep Purchase 55 63 3465 Total 1435 83565 b) LIFO 1-Jan Beginning inventory 185 60 11100 10-Feb Purchase 480 57 27360 13-Mar Purchase 120 42 5040 21-Aug Purchase 180 65 11700 5-Sep Purchase 470 63 29610 1435 84810 c) weighted average Cost of goods sold = 1435 * 59.30                 = 85095.50 d) specific identification 1-Jan Beginning inventory 600 60 36000 10-Feb Purchase 380 57 21660 13-Mar Purchase 120 42 5040 21-Aug Purchase 130 65 8450 5-Sep Purchase 205 63 12915 Total 1435 84065 FIFO LIFO Weighted specific average identification Sales 785 80 62800 650 80 52000 Total 1435 114800 FIFO LIFO Weighted Specific average identification Sales 114800 114800 114800 114800 Less : cost of goods sold 83565 84810 85095.5 84065 Gross Profit 31235 29990 29704.5 30735

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