Montoure Company uses a periodic inventory system. It entered into the following calendar-year purchases and sales transactions. Date Activities Units Acquired at Cost Units Sold at Retail January 1 Beginning inventory 645 units @ $45.00 per unit February 10 Purchase 490 units @ $42.00 per unit March 13 Purchase 245 units @ $27.00 per unit March 15 Sales 980 units @ $75.00 per unit August 21 Purchase 145 units @ $50.00 per unit September 5 Purchase 545 units @ $46.00 per unit September 10 Sales 690 units @ $75.00 per unit Totals 2,070 units 1,670 units Required: Compute cost of goods available for sale and the number of units available for sale. Compute the number of units in ending inventory. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, units sold consist of 645 units from beginning inventory, 345 from the February 10 purchase, 245 from the March 13 purchase, 95 from the August 21 purchase, and 340 from the September 5 purchase. Note: Round your average cost per unit to 2 decimal places. Round your final answers to the nearest whole dollar amount.

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter6: Inventories

Section: Chapter Questions

Problem 5PB: Pappas Appliances uses the periodic inventory system. Details regarding the inventory of appliances...

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Date	Activities	Units Acquired at Cost	Units Sold at Retail
January 1	Beginning inventory	645	units	@ $45.00 per unit
February 10	Purchase	490	units	@ $42.00 per unit
March 13	Purchase	245	units	@ $27.00 per unit
March 15	Sales				980	units	@ $75.00 per unit
August 21	Purchase	145	units	@ $50.00 per unit
September 5	Purchase	545	units	@ $46.00 per unit
September 10	Sales				690	units	@ $75.00 per unit
	Totals	2,070	units		1,670	units

Required:

Compute cost of goods available for sale and the number of units available for sale.
Compute the number of units in ending inventory.
Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification, units sold consist of 645 units from beginning inventory, 345 from the February 10 purchase, 245 from the March 13 purchase, 95 from the August 21 purchase, and 340 from the September 5 purchase.
Note: Round your average cost per unit to 2 decimal places. Round your final answers to the nearest whole dollar amount.
Compute gross profit earned by the company for each of the four costing methods.
Note: Round your average cost per unit to 2 decimal places. Round your final answers to the nearest whole dollar amount.
The company’s manager earns a bonus based on a percent of gross profit. Which method of inventory costing produces the highest bonus for the manager?

multiple choice
- Weighted Average
- FIFO
- LIFO
- Specific Identification

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