*Question 1 MetlockCompany Ltd. had 246 units in beginning inventory at a total

Question

*Question 1 MetlockCompany Ltd. had 246 units in beginning inventory at a total cost of NT$762,108. The company purchased 492 units at a total cost of NT$1,709,700. At the end of the year, Metlock had 185 units in ending inventory Compute the cost of the ending inventory and the cost of goods sold under FIFo and average-cost. (Round average-cost per unit to 2 decimal places, e.g. 2.25 and final answers to O decimal places, e.g. NT$45.) The cost of the ending inventory NT$ The cost of goods sold Which cost flow method would result in the higher net income? NT$ NT$ NT$ method would result in the higher net income Which cost flow method would result in inventories approximating current cost in the statement of financial position? method would result in inventories approximating current cost in the statement of financial position Which cost flow method would result in Metlock paying fewer taxes in the first year? method would result in Metlock paying lower taxes in the first year

Explanation / Answer

a) FIFO Units available for sale= 246+492=738 Units sold=738-185=553 Ending inventory=185 Cost of goods sold Units Unit cost Total Sale from beginning inventory 246 3098 762108 Sale from purchase 307 3475 1066825 553 1828933 Ending inventory Units Unit cost Total Inventory from purchase 185 3475 642875 185 642875 Ending inventory is NT$642875 Cost of goods sold= NT$1828933 Working: Unt cpst of beginning inventory=762108/246=NT$3098 UNIt cost of purchases=1709700/492=NT$3475 Average cost: Unit cost= Total cost/ total number of units available for sale                    =(762108+1709700)/(246+492)=2471808/738=NT$3349.33 Units available for sale= 246+492=738 Units sold=738-185=553 Ending inventory=185 Cost of goods sold= 553*3349.33=NT$1852179 Ending inventory= 185*3349.33=NT$619626 FIFO method would result in higher income, Average cost method would result in inventories approximating current cost in statement of financial position Average cost method would result in paying lower taxes in the first year.

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