Montoure Company uses a perpetual inventory system. It entered into the followin

Question

Montoure Company uses a perpetual inventory system. It entered into the following calendar-year 2013 purchases and sales transactions.

1.

Compute cost of goods available for sale and the number of units available for sale.

3.

Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. For specific identification units sold consist of 700 units from beginning inventory, 200 from the February 10 purchase, 100 from the March 13 purchase, 60 from the August 21 purchase, and 400 from the September 5 purchase. (Round your average cost per unit to 2 decimal places.)

4.

Compute gross profit earned by the company for each of the four costing methods. (Round your average cost per unit to 2 decimal places.)

Montoure Company uses a perpetual inventory system. It entered into the following calendar-year 2013 purchases and sales transactions.

Explanation / Answer

1. Costs go goods available for sale - $ 88,490 , # units = 1780

calculated by multiplying the number of units by the price per unit for each of the purchases made, then adding the price of each individual purchase to come up with the total cost of all purchases.

2. Ending inventing units = 320 units , calculated by subtracting the units sold (780 & 680) from the total units available for sale (1780)

3. FIFO - ending inventory cost - $ 16,640 (320 x $52) unit cost is $52 because the first units purchased have been sold already with earlier purchases ( "FIRST IN, FIRST OUT")

LIFO - ending inventory cost - $ 16,000 ( 320 x $50) unit cost is $50 because the unites remaining in ending inventory are the units that costs 50/unit in the first purchase that was made ("LAST IN, LAST OUT")

Weighted Average ending inventory - $ 15908.31 , total costs of goods $88490 divided by total # of units (1780) which gives us average cost of $ 49.71 per unit , multiplied by the # of units in ending inventory (320) , for a total cost of $ 15,908.31

Specific identification - $ 16,190 , using units identified in problem as sold , sum them up to get COGS ( (700

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