Concept explainers
Accounting for inventory using the perpetual inventory system-FIFO, LIFO, and weighted-average
Fit World began January with merchandise inventory of 90 crates of vitamins that cost a total of $5,850. During the month, Fit World purchased and sold merchandise on account as follows:
Jan. 2 | Purchase | 130 crates @ $ 76 each |
5 | Sale | 140 crates @ $ 100 each |
16 | Purchase | 170 crates @ $ 86 each |
27 | Sale | 180 crates @ $ 104 each |
Requirements
1. Prepare a perpetual inventory record, using the FIFO inventory costing method, and determine the company’s cost of goods sold, ending merchandise inventory, and gross profit.
2. Prepare a perpetual inventory record, using the LIFO inventory costing method, and determine the company’s cost of goods sold, ending merchandise inventory, and gross profit.
3. Prepare a perpetual inventory record, using the weighted-average inventory costing method, and determine the company’s cost of goods sold, ending merchandise inventory, and gross profit. (Round weighted-average cost per unit to the nearest cent and all other amounts to the nearest dollar.)
4. If the business wanted to pay the least amount of income taxes possible, which method would it choose?
Want to see the full answer?
Check out a sample textbook solutionChapter 6 Solutions
Horngren's Financial & Managerial Accounting (5th Edition)
- Financial Accounting Questionarrow_forwardhi expert please help mearrow_forwardParsons Company is planning to produce 2, 100 units of product in 2017. Each unit requires 2.20 pounds of materials at $6.20 per pound and a half-hour of labor at $12.00 per hour. The overhead rate is 40% of direct labor. (a) Compute the budgeted amounts for 2017 for direct materials to be used, direct labor, and applied overhead. (b) Compute the standard cost of one unit of product.arrow_forward
- hello teacher plz ansarrow_forwardSuperior Uniforms produce uniforms. The company allocates manufacturing overhead based on the machine hours each job uses. Superior Uniforms reports the following cost data for the past year: Direct labor hours Budget Actual 7,000 6,000 hours hours 7,000 6,300 hours hours Machine hours Depreciation on salespeople's autos Indirect materials Depreciation on trucks used to deliver uniforms to customers Depreciation on plant and equipment $23,000 $23,000 $ 49,000 $50,500 $13,500 $12,000 $ 64,000 $66,000 $ 43,500 $46,500 Indirect manufacturing labor Customer service hotline Plant utilities Direct labor cost $ 21,500 $23,000 $46,500 $ 47,500 $ 72,500 $85,500 Compute the predetermined manufacturing overhead rate.arrow_forwardneed help with this General accounting questionarrow_forward
- Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial And Managerial AccountingAccountingISBN:9781337902663Author:WARREN, Carl S.Publisher:Cengage Learning,
- Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCollege Accounting, Chapters 1-27 (New in Account...AccountingISBN:9781305666160Author:James A. Heintz, Robert W. ParryPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage Learning