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 630 units @ $45.00 per unit February 10 Purchase 460 units @ $42.00 per unit March 13 Purchase 230 units @ $27.00 per unit March 15 Sales 920 units @ $75.00 per unit August 21 Purchase 130 units @ $50.00 per unit September 5 Purchase 530 units @ $46.00 per unit September 10 Sales 660 units @ $75.00 per unit Totals 1,980 units 1,580 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 630 units from beginning inventory, 330 from the February 10 purchase, 230 from the March 13 purchase, 80 from the August 21 purchase, and 310 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 Specific Identification FIFO LIFO Weighted Average

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

Date	Activities	Units Acquired at Cost	Units Sold at Retail
January 1	Beginning inventory	630	units	@ $45.00 per unit
February 10	Purchase	460	units	@ $42.00 per unit
March 13	Purchase	230	units	@ $27.00 per unit
March 15	Sales				920	units	@ $75.00 per unit
August 21	Purchase	130	units	@ $50.00 per unit
September 5	Purchase	530	units	@ $46.00 per unit
September 10	Sales				660	units	@ $75.00 per unit
	Totals	1,980	units		1,580	units

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 630 units from beginning inventory, 330 from the February 10 purchase, 230 from the March 13 purchase, 80 from the August 21 purchase, and 310 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
- Specific Identification
- FIFO
- LIFO
- Weighted Average