Pool Corporation Inc. reported in its recent annual report that the industry experienced some price deflation one year followed by more normalized price inflation of approximately 2 percent overall despite price deflation for certain chemical products. This suggests that in some years Pool's overall inventory costs rise, and in some years they fall. Furthermore, in many years, the costs of some inventory items rise while others fall. Assume that Pool has only two product items in its inventory this year. Purchase and sale information are presented below. Pool uses a perpetual inventory system. Transaction Beginning inventory Purchases, February 7 Sales, February 28 Purchases, March 16 Sales, April 28 Item A Item B FIFO Inventory Item A Unit Cost Cost of Sales Units 40 80 50 100 110 $6 8 Weighted-Average 9 Inventory Item B Unit Cost Units 40 80 70 100 Required: 1. Compute the cost of sales for each of the two items separately using the FIFO and weighted average cost inventory costing methods. (Do not round intermediate calculations.) 900 $6 5 3

Pool Corporation Inc. reported in its recent annual report that the industry experienced some price deflation one year followed by more normalized price inflation of approximately 2 percent overall despite price deflation for certain chemical products. This suggests that in some years Pool's overall inventory costs rise, and in some years they fall. Furthermore, in many years, the costs of some inventory items rise while others fall. Assume that Pool has only two product items in its inventory this year. Purchase and sale information are presented below. Pool uses a perpetual inventory system. Transaction Beginning inventory Purchases, February 7 Sales, February 28 Purchases, March 16 Sales, April 28 Item A Item B FIFO Inventory Item A Unit Cost Cost of Sales Units 40 80 50 100 110 $6 8 Weighted-Average 9 Inventory Item B Unit Cost Units 40 80 70 100 Required: 1. Compute the cost of sales for each of the two items separately using the FIFO and weighted average cost inventory costing methods. (Do not round intermediate calculations.) 900 $6 5 3

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Company A's gross profit rate last year was 32.0% and this year it is 28.4%. Which of the following would not be a possible cause for this decline in the gross profit rate? O Company A's average margin between unit selling price and inventory unit cost is decreasing. O Company A may have seen a decline in total gross profit while maintaining net sales. Company A may have begun selling products with a higher markup. O Company A must have paid higher prices to suppliers without passing these costs on to customers.
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