chp 5 case study 2 please answer 2,3 and 4. Please provide the excel formulas fo
ID: 2601177 • Letter: C
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chp 5 case study 2 please answer 2,3 and 4. Please provide the excel formulas for your answers as work needs to be transferred to excel
CASE STUDY #2 2 SLO 5: Understand the methods of valuing inventory The Insertion Clinic specializes in quick orthopedic repairs of knees vis knee replacement surgery replacement inserts are very expensive, so the clinic has good inventory control and takes a physical inventory at year-end to establish the ending inventory The knee 4 quant Inventory actvity spanning fiscal year 20XX for Type 112 Knee Inserts, which are billed at $10,000 each, is depicted in the following table: Description Unit Unit Cost Total Cost March 1 Purchase #1 June 15: Purchase #2 18 $2,600 20,000 Total on hand 48 $115,200 14 Invent 17 Suzanne Summer, office manager, knows that account choices can affect net income. She knows you studied health care finance and turns to you to help her value the inventory a and find the best method that produces the highest proft at the clinic 9 1. Explain to Suzanne why you would not consider using the specific identification costing method to value the i 20 2. Compute the cost of inventory used(sold) via weighted average cost 21 3. Compute the cost of inventory used (sold) via FIFO cos 22 4. Compute the cost of inventory used (sold) via LIFO costing 35. Which method produces the highest profit? Why? Does this method always produced the highest profit? 46. Explain to Suzanne that if she chooses the method above there are trade-offs. What are the trade-offs to using this method?Explanation / Answer
2 Weighted average cost per unit=Cost ofTotal units on hand/Total units on hand=115200/48=$2400 per unit Cost of inventory sold=Units sold*Weighted average cost per unit=28*2400=67200 3 Under FIFO method,it is assumed that goods purchased first are sold first. Sold 28 units from inventory in the following order: Description Unit Unit cost Total cost Beginning inventory 10 2000 20000 March 1-purchase 18 2200 39600 Units sold 28 59600 .=SUM(G8:G9) Cost of units sold=$ 59600 4 Under LIFO method,it is assumed that goods purchased last are sold first. Sold 28 units from inventory in the following order: Description Unit Unit cost Total cost Oct 7-Purcase 12 2900 34800 June 15-purchase 8 2600 20800 March 1-purchase 8 2200 17600 Units sold 28 73200 .=SUM(G17:G19) Cost of units sold=$ 73200
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