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March_3_SI_Session

March_3_SI_Session - March 5 2009 SI Session 1 Freezer Burn...

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March 5, 2009 SI Session 1. Freezer Burn was formed in late 2004 to sell a single product, the Ice Cream Scoop, which is imported from Canada. The price of this product was a constant $16 per unit during 2004 and 2005, but due to unfavorable exchange rates the cost of this product more than doubled during 2006 and 2007. Sales for 2007 (2006) totaled 67,500 units (54,000 units). Freezer Burn uses a periodic inventory system and provides the following information about cost of goods purchased during the last two years: Opening Inventory (12/31/05) 9,000 units @ $16.00 $144,000 Purchase, April 16, 2006 27,000 units @ $18.00 $486,000 Purchase, July 28, 2006 30,000 units @ $23.00 $690,000 Purchase, March 23, 2007 36,000 units @ $28.00 $1,008,000 Purchase, September 3, 2007 42,000 units @ $35.00 $1,470,000 A physical inventory count at year-end, December 31, 2007 (2006) reveals 22,500 (12,000) units still on hand. a. Compute Cost of Goods Sold and Ending Inventory for both 2006 and 2007 for Freezer Burn for each of the three inventory methods: Weighted average (WAVE), FIFO, and LIFO. WAVE FIFO LIFO Cost of goods sold, 2006 Inventory, December 31, 2006 Cost of goods sold, 2007 Inventory, December 31, 2007 Supporting calculations for a.:
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Supporting calculations for a.:
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