Periodic and Perpetual Systems and Inventory Costing Methods During July 2014, M

Question

Periodic and Perpetual Systems and Inventory Costing Methods

During July 2014, Micanopy, Inc., sold 500 units of its product Empire for $8,000. The following units were available:

A sale of 500 units was made after purchase 3. For the specific identification method, assume that of the units sold, 200 came from beginning inventory and 300 came from purchase 3.

Determine cost of goods available for sale and ending inventory in units.

Determine the costs that should be assigned to cost of goods sold and ending inventory under each of the following assumptions. For each alternative, show the gross margin. Round unit costs to the nearest cent and round the final answers to the nearest dollar.

Costs are assigned under the periodic inventory system using:
The specific identification method:

The average-cost method:

The FIFO method:

The LIFO method:

Costs are assigned under the perpetual inventory system using:
The average-cost method

The FIFO method

The LIFO method

Units Cost Beginning inventory 200 $ 2 Purchase 1 80 4 Purchase 2 120 6 Purchase 3 300 9 Purchase 4 180 12

Explanation / Answer

Units Cost per unit Total cost Beginning Inventory 200 2 400 Purchase 1 80 4 320 Purchase 2 120 6 720 Purchase 3 300 9 2700 Purchase 4 180 12 2160 Total Goods available for sales 880 6300 Under specific Identification method Units Cost per unit Total Cost of goods sold 300 9 2700 200 2 400 Total cost of goods sold 500 3100 Ending Inventory 80 4 320 120 6 720 180 12 2160 Total cost of ending inventory 380 3200 Periodic Inventory System Specification Identification Method AMT in $ Cost of goods sold 3100 Ending Inventory 3200 Gross Margin 4900 Periodic Inventory System The average cost method AMT in $ Cost of goods sold 3580 Ending Inventory 2720 Gross Margin 4420 Periodic Inventory System AMT in $ FIFO METHOD Cost of goods sold 2340 Ending Inventory 3960 Gross Margin 5660 Periodic Inventory System AMT in $ LIFO METHOD Cost of goods sold 4980 Ending Inventory 1320 Gross Margin 3020

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