Answer:
LIFO:
Under LIFO method units purchased last are sold first.
Sold units included all units purchased on May 4, Apr. 1 and Mar. 2 and 1 unit purchased on Feb. 2
Cost of goods sold = 3*625+2*612+1*618+1*600 = $4,317
Ending inventory = Inventory as on January 31, 2014 and 1 unit purchased on Feb. 2 = 1785+600 = $2,385
Gross profit = sales-Cost of goods sold = 8050-4317 = $3,733
Gross profit rate = 3,733/8050 = 46.37%
FIFO:
Under FIFO method units purchased first are sold first.
Sold units included all units of beginning inventory, purchased on Feb 2, Mar 2 and 1 unit from Apr. 1 purchase
Cost of goods sold = 3*595+2*600+1*618+1*612 = $4,215
Ending inventory = 1 unit purchased on Apr 1 and all units of May 4 purchase = 612+1875 = $2,487
Gross profit = sales-Cost of goods sold = 8050-4,215= $3,835
Gross profit rate = 3,835/8050 = 47.64%
Average cost
Average cost per unit = 6702/11 = $609.273
Cost of goods sold = 7*609.273 = $4,264.91
Ending inventory = 4*609.273 = $2,437.09
Gross profit = sales-Cost of goods sold = 8050-4,264.91= $3785.09
Gross profit rate = 3785.09/8050 = 47.02%
Step-by-step explanation: