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(7) - 13, 22

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

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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 7-22) a) Gross Margin = Sales – COGS Gross Margin 2009 = 175,000 – (75,000 + 100,000 – 80,000) = \$80,000

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