Multiple Choice Question 77 At May 1, 2018, Bonita Company had beginning invento

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Multiple Choice Question 77

At May 1, 2018, Bonita Company had beginning inventory consisting of 170 units with a unit cost of $6.00. During May, the company purchased inventory as follows:

850 units at $6.00
580 units at $8.00

The company sold 1000 units during the month for $11 per unit. Bonita uses the average cost method. Bonita’s gross profit for the month of May is

Multiple Choice Question 80

Sheffield Company uses a periodic inventory system. Details for the inventory account for the month of January, 2018 are as follows.

An end of the month (1/31/18) inventory showed that 170 units were on hand. If the company uses LIFO, what is the value of the ending inventory?

Explanation / Answer

77) Cost of goods available for sale = (170*6+850*6+580*8) = 10760

Units of goods available for sale = (170+850+580) = 1600

Cost per unit = 10760/1600 = 6.725 per unit

Cost of goods sold = 1000*6.725 = 6725

Sales = 1000*11 = 11000

Gross profit = 11000-6725 = 4275

so answer is d) $4275

80) Value of ending inventory = (170*4) = 680

so answer is a) $680

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