Question

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Units
1
Cost Flow Methods
The following three identical units of Item LO3V are purchased during April:
Item Beta
Cost
April 2
Purchase
$270
April 15
Purchase
272
April 20
Purchase
Total
$816
Average cost per unit
($816 + 3 units)
Assume that one unit is sold on April 27 for $345. Determine the gross profit for April and ending inventory on April 30 using the (a) first-in, first-out (FIFO); (b)
last-in, first-out (LIFO); and (c) weighted average cost method.
1
1
274
3
$272
Gross Profit
Ending Inventory
a. First-In, first-out (FIFO)
b. Last-in, first-out (LIFO)
c. Weighted average cost

Answer 1

Cost Flow Methods

Gross profit and ending inventory on April 30 using:

Gross Profit Ending Inventory

(a) first-in, first-out (FIFO) $75 $546

(b) last-in, first-out (LIFO) $71 $542

(c) weighted average cost method $73 $544

Step-by-step explanation:

a) Data and Calculations:

Item Beta Cost

April 2 Purchase $270

April 15 Purchase 272

April 20 Purchase 274

Total $816

Average cost per unit = $272 ($816/ 3 units)

Assume that one unit is sold on April 27 for $345

Gross profit and ending inventory on April 30 using:

Gross Profit Ending Inventory

(a) first-in, first-out (FIFO) $75 ($345 - $270) $546 ($816 - $270)

(b) last-in, first-out (LIFO) $71 ($345 - $274) $542 ($816 - $274)

(c) weighted average cost method $73 ($345 - $272) $544 ($816 - $272)

Ending inventory = Cost of goods available for sale Minus Cost of goods sold

Gross profit = Sales Minus Cost of goods sold