The Department of Roads and Highways for a large Canadian province has several depots throughout the province where they store rock-salt. The rock-salt is used during the winter. At April 1, they had an inventory of 2,000 tons worth $800,000 During the fiscal year, the following occurred: • Summer: Purchased 40,000 tons at $300/ton • Fall: Purchased 50,000 tons at $350/ton • Months of December and January: used 62,000 tons • February 1: purchased 40,000 tons at $505/ton • Month of February: used 20,000 tons • February 27: purchased 5,000 tons at $610/ton • February 28: helped a large city by giving them 10,000 tons for $8.2 million • Month of March: used 38,000 tons Required: Calculate the value of rock-salt used during the year and the value of the rock salt in the remaining inventory based on • FIFO • Weighted average - Periodic • Weighted average – Perpetual Which method of inventory valuation do you recommend they use? Explain your response

The Department of Roads and Highways for a large Canadian province has several depots throughout the province where they store rock-salt. The rock-salt is used during the winter. At April 1, they had an inventory of 2,000 tons worth $800,000 During the fiscal year, the following occurred: • Summer: Purchased 40,000 tons at $300/ton • Fall: Purchased 50,000 tons at $350/ton • Months of December and January: used 62,000 tons • February 1: purchased 40,000 tons at $505/ton • Month of February: used 20,000 tons • February 27: purchased 5,000 tons at $610/ton • February 28: helped a large city by giving them 10,000 tons for $8.2 million • Month of March: used 38,000 tons Required: Calculate the value of rock-salt used during the year and the value of the rock salt in the remaining inventory based on • FIFO • Weighted average - Periodic • Weighted average – Perpetual Which method of inventory valuation do you recommend they use? Explain your response

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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