Hemming Co. reported the following current-year purchases and sales for its only product. Date Activities Units Acquired at Cost Units Sold at Retail Jan. 1 Beginning inventory 210 units @ $10.40 = $ 2,184 Jan. 10 Sales 170 units @ $40.40 Mar. 14 Purchase 310 units @ $15.40 = 4,774 Mar. 15 Sales 270 units @ $40.40 July 30 Purchase 410 units @ $20.40 = 8,364 Oct. 5 Sales 380 units @ $40.40 Oct. 26 Purchase 110 units @ $25.40 = 2,794 Totals 1,040 units $ 18,116 820 units Exercise 5-9A Periodic: Inventory costing system LO P3 Required: Hemming uses a periodic inventory system. (a) Determine the costs assigned to ending inventory and to cost of goods sold using FIFO. (b) Determine the costs assigned to ending inventory and to cost of goods sold using LIFO. (c) Compute the gross margin for each method.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Hemming Co. reported the following current-year purchases and sales for its only product.
| Date | Activities | Units Acquired at Cost | Units Sold at Retail | |||||||||||||
| Jan. | 1 | Beginning inventory | 210 | units | @ $10.40 | = | $ | 2,184 | ||||||||
| Jan. | 10 | Sales | 170 | units | @ $40.40 | |||||||||||
| Mar. | 14 | Purchase | 310 | units | @ $15.40 | = | 4,774 | |||||||||
| Mar. | 15 | Sales | 270 | units | @ $40.40 | |||||||||||
| July | 30 | Purchase | 410 | units | @ $20.40 | = | 8,364 | |||||||||
| Oct. | 5 | Sales | 380 | units | @ $40.40 | |||||||||||
| Oct. | 26 | Purchase | 110 | units | @ $25.40 | = | 2,794 | |||||||||
| Totals | 1,040 | units | $ | 18,116 | 820 | units | ||||||||||
Exercise 5-9A Periodic: Inventory costing system LO P3
Required:
Hemming uses a periodic inventory system.
(a) Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.
(b) Determine the costs assigned to ending inventory and to cost of goods sold using LIFO.
(c) Compute the gross margin for each method.
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