4. Use the information below to determine the sales revenue, cost of goods sold

Question

4. Use the information below to determine the sales revenue, cost of goods sold and gross profit that would be reported for the company related to the July 18 sale assuming the company uses AVERAGE COST, FIFO and LIFO inventory valuation and a perpetual inventory system. June 25: July 5: July 22: July 18: Purchased 250 units at $13 per unit. Purchased 100 units at $17 per unit. Purchased 50 units at $20 per unit. Sold 82 units at $22 per unit. AVE COST FIFO LIFO Revenue Cost of Goods Sold Gross Profit

Explanation / Answer

Ave Cost

FIFO

LIFO

Revenue

1,804

1,804

1,804

Cost of Goods Sold

1,219.75

1,066

1,544

Gross Profit

584.25

738

260

Revenue on all basis = 82 units * $22 per unit

                                     = $1,804

Average Cost Basis

Cost per unit= {250*13 + 100*17 + 50*20} / 400

            = 5,950 / 400

            = 14.875

Cost of Goods Sold= 14.875*82units = $1,219.75

FIFO Basis

Cost of 82 units will represent first 82 units out of the stock of 100 units bought @ 13 per unit

Cost of goods sold = 13*82units = 1,066

LIFO Basis

Cost of 82 units sold will represent the last bought stocks.

Thus Cost of Goods sold = 50units*$20per unit + 32units*$17per unit

                                           = 1,000 + 544

                                           = 1,544

Ave Cost

FIFO

LIFO

Revenue

1,804

1,804

1,804

Cost of Goods Sold

1,219.75

1,066

1,544

Gross Profit

584.25

738

260

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