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(a) (b) Teal Company sells two types of pumps. One is large and is for commercia

ID: 2525372 • Letter: #

Question

(a)

(b)

Teal Company sells two types of pumps. One is large and is for commercial use. The other is smaller and is used in residential swimming pools. The following inventory data is available for the month of March.
Units Price per
Unit
Total Residential Pumps Inventory at Feb. 28: 210 $ 380 $ 79,800 Purchases: March 10 510 $ 450 $ 229,500 March 20 380 $ 470 $ 178,600 March 30 300 $ 490 $ 147,000 Sales: March 15 510 $ 530 $ 270,300 March 25 380 $ 560 $ 212,800 Inventory at March 31: 510 Commercial Pumps Inventory at Feb. 28: 600 $ 810 $ 486,000 Purchases: March 3 600 $ 890 $ 534,000 March 12 320 $ 950 $ 304,000 March 21 510 $ 1,000 $ 510,000 Sales: March 18 910 $ 1,080 $ 982,800 March 29 610 $ 1,140 $ 695,400 Inventory at March 31: 510

Explanation / Answer

Cost of Ending Inventory (by using LIFO Method):-

Residential Pumps: [ (210x380) + (300x450) ] = $ 214800

Commercial Pumps: [ 510x810 ] = $ 413100

Total Cost pf Inventory = (214800 + 413100) = $ 627900

Cost of Goods Sold = Opening Inventory Value + Purchase Value - Closing Inventory Value

Residential Pumps = (79800 + 555100 - 214800) = $ 420100

Commercial Pumps = (486000 + 1348000 - 413100) = $ 1420900

Total Cost of Goods Sold = (420100 + 1420900) = $ 1841000

Price Index = Cost of Inventory at Most Recent Prices / Cost of Inventory at Base Prices

Residential Pumps = ( 510x490) / (510x380) = 1.289

Commercial Pumps = (510x1000) / (510x810) = 1.235