Module3ccc6

# Module3ccc6 - (iii Gross Profit(iv Gross Profit Rate Sales...

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(a) COST OF GOODS AVAILABLE FOR SALE Date Explanation Units Unit Cost Total Cost Feb. 1 Beginning Inventory 3 \$545.00 \$1,635.00 Feb. 2 Purchase 2 550.00 1,100.00 Mar. 2 Purchase 1 567.00 567.00 Apr. 1 Purchase 2 561.00 1,122.00 May 4 Purchase 3 573.33 1,720.00 Total 11 \$6,144.00 (b) LIFO (i) Ending Inventory (ii) Cost of Goods Sold Date Units Unit Cost Total Cost Cost of goods available for sale \$6,144.00 Feb. 1 3 \$545.00 \$1,635.0 0 Less: Ending inventory 2,185.00 Feb. 2 1 550.00 550.0 0 Cost of goods sold \$3,959.00 4 \$2,185.0 0 (iii) Gross Profit (iv) Gross Profit Rate Sales \$7,350.00 \$3,391.00 46.14% Less: Cost of goods sold 3,959.00 \$7,350.00 Gross profit \$3,391.00 *(\$1,050 + \$2,100 + \$3,150 + \$1,050) FIFO

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(i) Ending Inventory (ii) Cost of Goods Sold Date Units Unit Cost Total Cost Cost of goods available for sale \$6,144.00 May 4 3 \$573.33 \$1,720.0 0 Less: Ending inventory 2,281.00 Apr. 1 1 561.00 561.0 0 Cost of goods sold \$3,863.00 4 \$2,281.0
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Unformatted text preview: (iii) Gross Profit (iv) Gross Profit Rate Sales \$7,350.00 \$3,487.00 47.44% Less: Cost of goods sold 3,863.00 \$7,350.00 Gross profit \$3,487.00 Average Cost (i) Ending Inventory (ii) Cost of Goods Sold \$6,144.00/11 = \$558.545 Cost of goods available for sale \$6,144.00 Less: Ending inventory \$2,234.18 Units Unit Cost Total Cost Cost of goods sold \$3,909.82 4 \$558.545 \$2,234.18 (iii) Gross Profit (iv) Gross Profit Rate Sales \$7,350.00 \$3,440.18 46.81% Less: Cost of goods sold 3,909.82 \$7,350.00 Gross profit \$3,440.18 (d) Natalie is thinking of getting a bank loan. If this is the only factor Natalie has to con-sider in choosing an inventory cost flow assumption, which cost flow assumption would you recommend that Natalie use? Why?...
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## This note was uploaded on 04/04/2011 for the course MNG 500 taught by Professor Linkiden during the Spring '11 term at UMass (Amherst).

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Module3ccc6 - (iii Gross Profit(iv Gross Profit Rate Sales...

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