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Unformatted text preview: P6-5A
You are provided with the following information for Pavey Inc. for the month ended October 31, 2008. Pavey uses a periodic method for inventory.
Unit Cost or
(a) Calculate (i) ending inventory, (ii) cost of goods sold, (iii) gross profit, and (iv) gross profit rate under each of the following methods. (Round
weighted-average cost per unit to 3 decimal places, e.g. 2.250. Use the rounded amount for future computations. Round gross profit rate to 1
decimal place, e.g. 10.5 and all other answers to 0 decimal places, e.g. 125.)
Cost of goods sold
Gross profit rate LIFO
29.6 % (b) Compare results for the three cost flow assumptions.
What cost flow results in the lowest inventory value. LIFO
What cost flow results in the lowest cost of goods sold. FIFO
What cost flow results in the lowest gross profit. LIFO
What cost flow results in the lowest gross profit rate. LIFO FIFO
31.4 % Average Cost
30.5 % ...
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This note was uploaded on 07/31/2011 for the course ACCT 557 taught by Professor Kahn during the Spring '10 term at Strayer.
- Spring '10
- Financial Accounting