Chapter 6, Problem 6.25AE

LO 4

(Learning Objective 4: Compute and evaluate gross profit percentage and inventory turnover) The Blue Heron Shop had the following inventory data:

	2017	2018
Ending inventory at:
FIFO Cost ...............	$15,160	$ 30,040
LIFO Cost ..............	12,440	18,520
Cost of goods sold at:
FIFO Cost ................		$ 81,360
LIFO Cost .................		92,880
Sales revenue ............		144,000

Company managers need to know the company’s gross profit percentage and rate of inventory turnover for 2018 under

  1.    FIFO.

  2.    LIFO.

Which method produces a higher gross profit percentage? A higher inventory turnover?