PA1. LO 10.1 When prices are rising (inflation), which costing method would produce the highest value for gross margin? Choose between first-in, first-out (FIFO); last-in, first-out (LIFO); and weighted average (AVG). Evansville Company had the following transactions for the month. Number of Units Cost per Unit Purchase $6,000 7,000 7,500 Purchase 3 Purchase 4 Calculate the gross margin for each of the following cost allocation methods, assuming A62 sold just one unit of these goods for $10,000. Provide your calculations. A. first-in, first-out (FIFO) B. last-in, first-out (LIFO) C. weighted average (AVG)
PA1. 10.1 When prices are rising (inflation), which costing method would produce thehighestvalue for gross margin? Choose between first-in, first-out (FIFO); last-in, first-out (LIFO); and weighted average (AVG). Evansville Company had the following transactions for the month.
Calculate the gross margin for each of the following cost allocation methods, assuming A62 sold just one unit of these goods for $10,000. Provide your calculations.
A. first-in, first-out (FIFO)
B. last-in, first-out (LIFO)
C. weighted average (AVG)
Under FIFO, intial purchases are sold first. So, the cost of beginning will be the cost of goods sold and ending inventory will consist of the ending purchases.
Under LIFO, the cost of ending purchases consists cost of goods sold.
Under Weighted Average, Total cost of goods purchased is divided by the total units purchased to calculate the weighted average cost per unit. This cost is then multiplied with the units sold and ending inventory units.
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