Montoure Company uses a periodic inventory system. It entered into the following
ID: 2493164 • Letter: M
Question
Montoure Company uses a periodic 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.
3.
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 630 units from beginning inventory, 285 from the February 10 purchase, 215 from the March 13 purchase, 65 from the August 21 purchase, and 280 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 periodic inventory system. It entered into the following calendar-year 2015 purchases and sales transactions.
Explanation / Answer
Answer 1. Cost of Goods Available for Sale Date Unit Cost per Unit Total Jan-01 630 50 31,500 Feb-10 415 47 19,505 Mar-13 215 32 6,880 Aug-21 130 55 7,150 Sep-05 530 51 27,030 Total 1,920 92,065 Answer 2. No. of unit in Ending Inventory = 1920 Units (Units available for sale) - 1475 Units (Units Sold) No. of unit in Ending Inventory = 445 Units Answer 3. FIFO Method Calculation of Value of Ending Inventory Under FIFO Method Date Unit Cost per Unit Total Sep-05 445 51 22,695 Total Cost 445 51 22,695 Cost of Goods Sold Date Unit Cost per Unit Total Jan-01 630 50 31,500 Feb-10 415 47 19,505 Mar-13 215 32 6,880 Aug-21 130 55 7,150 Sep-05 85 51 4,335 Total 1,475 69,370 LIFO Method Calculation of Value of Ending Inventory Under LIFO Method Date Unit Cost per Unit Total Jan-01 445 50 22,250 Total Cost 445.00 22,250.00 Cost of Goods Sold Date Unit Cost per Unit Total Jan-01 185 50 9,250 Feb-10 415 47 19,505 Mar-13 215 32 6,880 Aug-21 130 55 7,150 Sep-05 530 51 27,030 Total 1,475 69,815 Average Cost Date Unit Cost per Unit Total Jan-01 630 50 31,500 Feb-10 415 47 19,505 Mar-13 215 32 6,880 Aug-21 130 55 7,150 Sep-05 530 51 27,030 Total 1,920 92,065 Average Cost = $92065 / 1920 Units = $47.95 per Unit Calculation of Value of Ending Inventory Under Average Method Date Unit Cost per Unit Total 445.00 47.95 21,337.75 Cost of Goods Sold Date Unit Cost per Unit Total 1,475 47.95 70,726 Specific Identification Method Ending Inventory Date Unit Cost per Unit Total Feb-10 130 47 6,110 Aug-21 65 55 3,575 Sep-05 250 51 12,750 Total 445 22,435 Cost of Goods Sold Date Unit Cost per Unit Total Jan-01 630 50 31,500 Feb-10 285 47 13,395 Mar-13 215 32 6,880 Aug-21 65 55 3,575 Sep-05 280 51 14,280 Total 1,475 69,630 Answer 4. Sales Value Date Unit Cost per Unit Total Mar-15 815 80 65,200 Sep-10 660 80 52,800 Total 1,475 118,000 Calculation of Gross Profit FIFO LIFO Weighted Average Specific Identification Sales 118,000 118,000 118,000 118,000 COGS (69,370) (69,815) (70,726) (69,630) Gross Profit 48,630 48,185 47,274 48,370
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