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(7) - 13, 22 - Accounting Pre Class Problems Chapter 7...

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Accounting Pre Class Problems – Chapter 7 7-13) a) FIFO Cost = (30 x $600) + (45 x $600) + (10 x $625) + (40 x $625) = $76,250.00 1. Cost of Goods Sold = $76,250 Ending Inventory = $50,000 # Units Purchases Cost per unit Sales Apr 1 Beg. Inv 75 $45,000 $600 3 Purchase 50 $31,250 $625 5 Sale 30 $33,000 11 Purchase 25 $16,250 $650 15 Sale 55 $68,750 22 Sale 40 $48,000 28 Purchase 50 $33,750 $675 2. Moving Average Cost (April 5 th sale): = [($45,000 + $31,250) / 125 units] x 30 = $18,300 Moving Average Cost (April 15 th sale): = [($45,000 + $31,250 - $18,300 + $16,250) / (150 - 30) x 55 = $34,008 Moving Average Cost (April 22 nd sale): = [($45,000 + $31,250 - $18,300 + $16,250 - $34,008) / (150 – 30 - 55) x 40 = $24,734 Total Cost of Goods Sold = $18,300 + $34,008 + $24,734 = $77,042 Ending Inventory = $49,208 b) FIFO: $149,750 - 76,250 = $73,500 Gross margin = 73,500/149,750 = 49.08% Moving Avg.: $149,750 – 77,042 = $72,208 Gross margin = 72,208/149,750 = 48.22% FIFO produces the larger gross margin
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This note was uploaded on 09/12/2011 for the course MGCR 211 taught by Professor La rocca during the Fall '08 term at McGill.

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(7) - 13, 22 - Accounting Pre Class Problems Chapter 7...

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