May 1, beginning inventory Purchases May 15 May 25 Sales for the month GUITAR PIANO No. of units Unit cost No. of units Unit cost 10,000 P60 6,000 40 14,000 65 9,000 42 6,000 75 20,000 (at P80) 10,000 (at P45)
May 1, beginning inventory Purchases May 15 May 25 Sales for the month GUITAR PIANO No. of units Unit cost No. of units Unit cost 10,000 P60 6,000 40 14,000 65 9,000 42 6,000 75 20,000 (at P80) 10,000 (at P45)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
DYLAN MERCHANDISING CO. is the leading distributor of musical instruments. The company uses the first-in-first-out (FIFO) method of calculating the cost of inventories. Information for DYLAN’s top two products for the month of May is presented below: (see attached image)
On May 31, DYLAN’s suppliers reduced their price from the last purchase price by the following percentages:
GUITAR 25%
PIANO 20%
Accordingly, DYLAN reduced its selling prices by 15% on all items beginning June 1. Selling costs are estimated at 10% of selling price and both products have a normal profit of 30% on sales (after selling costs).
How much is the loss on inventory write-down, if any, for the month of May?
Transcribed Image Text:May 1, beginning inventory
Purchases
May 15
May 25
Sales for the month
GUITAR
PIANO
No. of units
Unit cost
No. of units
Unit cost
10,000
P60
6,000
40
14,000
65
9,000
42
6,000
75
20,000
(at P80)
10,000
(at P45)
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