Natalie is busy establishing both divisions of her business (cookie classes and mixer sales) and completing her business degree. Hergoals for the next 11 months are to sell one mixer per month and to give two to three classes per weekThe cost of the fine European mixers is expected to increase. Natalie has just negotiated new terms with Kzinski that include shippingcosts in the negotiated purchase price (mixers will be shipped FOB destination), but the supplier cannot guarantee the invoice price.Natalie has decided to use a periodic inventory system and now must choose a cost flow assumption for her mixer inventory.The following transactions occur in February to May 2021.Feb. 21625Mar. 23031Apr. 11330May 427Natalie buys two deluxe mixers on account from Kzinski Supply Co. for $1,150 ($575 each), FOB destination, terms n/30.She sells one deluxe mixer for $1,100 cash.She pays the amount owed to Kzinski.She buys one deluxe mixer on account from Kzinski Supply Co. for $592, FOB destination, terms n/30.Natalie sells two deluxe mixers for a total of $2,200 cash.She pays the amount owed to Kzinski.She buys two deluxe mixers on account from Kzinski Supply Co. for $1,172 ($586 each), FOB destination, terms n/30.She sells three deluxe mixers for a total of $3,300 cash.Natalie pays the amount owed to Kzinski.She buys three deluxe mixers on account from Kzinski Supply Co. for $1,800 ($600 each), FOB destination, terms n/30.She sells one deluxe mixer for $1,100 cash. Calculate (i) ending inventory. (ii) cost of goods sold, (iii) gross profit, and (iv) gross profit rate under each of the following methods:LIFO, FIFO, and average cost. (Round Gross profit rate to 2 decimal places, e.g. 25.22%)EndinginventoryCost ofgoods soldGross profitGross profitrate$69LIFO2,2854,1393,56146.25 %$69$FIFO2,3864,0383,66247.56%6969Average Cost2,3684,0563,64447.32%

Calculate (1) ending inventory. (ii) cost of goods sold, (iii) gross profit, and (iv) gross profit rate under each of the following methods: LIFO, FIFO, and average cost. (Round Gross profit rate to 2 decimal places, e.g. 25.22%)

Calculate (1) ending inventory. (ii) cost of goods sold, (iii) gross profit, and (iv) gross profit rate under each of the following methods: LIFO, FIFO, and average cost. (Round Gross profit rate to 2 decimal places, e.g. 25.22%)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Overheads

In cost accounting, overhead refers to those expenses which occur during the operating of a business. Overhead includes the fixed, variable, or semi-variable which is not directly involved with a company product or service. It is very important to analyze overhead expense as it helps the company in determining how much a company must charge for its products and services so that they can generate profit. Overhead expenses depend upon the nature of the business operations.

Question

Natalie is busy establishing both divisions of her business (cookie classes and mixer sales) and completing her business degree. Her
goals for the next 11 months are to sell one mixer per month and to give two to three classes per week
The cost of the fine European mixers is expected to increase. Natalie has just negotiated new terms with Kzinski that include shipping
costs in the negotiated purchase price (mixers will be shipped FOB destination), but the supplier cannot guarantee the invoice price.
Natalie has decided to use a periodic inventory system and now must choose a cost flow assumption for her mixer inventory.
The following transactions occur in February to May 2021.
Feb. 2
16
25
Mar. 2
30
31
Apr. 1
13
30
May 4
27
Natalie buys two deluxe mixers on account from Kzinski Supply Co. for $1,150 ($575 each), FOB destination, terms n/30.
She sells one deluxe mixer for $1,100 cash.
She pays the amount owed to Kzinski.
She buys one deluxe mixer on account from Kzinski Supply Co. for $592, FOB destination, terms n/30.
Natalie sells two deluxe mixers for a total of $2,200 cash.
She pays the amount owed to Kzinski.
She buys two deluxe mixers on account from Kzinski Supply Co. for $1,172 ($586 each), FOB destination, terms n/30.
She sells three deluxe mixers for a total of $3,300 cash.
Natalie pays the amount owed to Kzinski.
She buys three deluxe mixers on account from Kzinski Supply Co. for $1,800 ($600 each), FOB destination, terms n/30.
She sells one deluxe mixer for $1,100 cash.

Calculate (i) ending inventory. (ii) cost of goods sold, (iii) gross profit, and (iv) gross profit rate under each of the following methods:
LIFO, FIFO, and average cost. (Round Gross profit rate to 2 decimal places, e.g. 25.22%)
Ending
inventory
Cost of
goods sold
Gross profit
Gross profit
rate
$
69
LIFO
2,285
4,139
3,561
46.25 %
$
69
$
FIFO
2,386
4,038
3,662
47.56
%
69
69
Average Cost
2,368
4,056
3,644
47.32
%

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It has been given in the question that a periodic inventory system has been followed and adopted by the company and the solution has been based upon it that it to check in total and value at end rather at each transaction of sale.

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Subject: accounting