Jelly Bros. Tools, Inc. had the following layers in its LIFO tablesaw inventory at january 1, 2018. The company sets its selling price at 200% of relacement cost at the time of sale. Replacement cost as of January 1, 2018 was $850 per unit and remained unchanged throughout 2018. During 2018, the company puchased 650 units and sold 1,150 units. Yeaar LIFO layer added Units Unit Cost 2015 200 $740 2016 190 $780 2017 170 $820 Required: 1. Calculate the difference between Jelly Bros. Tools, Inc.'s current cost gross margin (on a replacement cost basis) and the LIFO gross margin as reported by the company in 2018. 2. What does the difference represent?
Jelly Bros. Tools, Inc. had the following layers in its LIFO tablesaw inventory at january 1, 2018. The company sets its selling price at 200% of relacement cost at the time of sale. Replacement cost as of January 1, 2018 was $850 per unit and remained unchanged throughout 2018. During 2018, the company puchased 650 units and sold 1,150 units.
Yeaar LIFO layer added Units Unit Cost
2015 200 $740
2016 190 $780
2017 170 $820
Required:
1. Calculate the difference between Jelly Bros. Tools, Inc.'s current cost gross margin (on a replacement cost basis) and the LIFO gross margin as reported by the company in 2018.
2. What does the difference represent?
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