Problem 6-2AA Periodic: Alternative cost flows LO P3 [The following information

Question

Problem 6-2AA Periodic: Alternative cost flows LO P3

[The following information applies to the questions displayed below.]

Warnerwoods Company uses a periodic inventory system. It entered into the following purchases and sales transactions for March.

Problem 6-2AA Part 3

3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. (Round your average cost per unit to 2 decimal places.)

Problem 6-2AA Part 4

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 and final answers to nearest whole dollar.)

Activities Units Sold at Retail Units Acquired at Cost 160 units e $50 per unit 460 units e $55 per unit Date Mar. 1 Beginning inventory Mar. 5 Purchase Mar. 9 Sales Mar. 18 Purchase Mar. 25 Purchase Mar. 29 Sales 480 units $85 per unit 240 units e $60 per unit 320 units e $62 per unit 280 units $95 per unit 760 units Totals 1,180 units For specific identification, the March 9 sale consisted of 60 units from beginning inventory and 420 units from the March 5 purchase; the March 29 sale consisted of 100 units from the March 18 purchase and 180 units from the March 25 purchase.

Explanation / Answer

3.a) Calculation of ending inventory using FIFO

Units of Cost of goods available for sold : 160+460+240+320=1180units

Units of Cost of goods sold : 160+460+140=760 units

Units of Ending inventory : 1180-760= 420 units

b) Calculation of ending inventory using LIFO

c)  Calculation of ending inventory using weighted average

Cost of goods available for sold : 160*50+460*55+240*60+320*62=67540

Units of Cost of goods available for sold : 1180 units

Weighted average cost per unit : 67540/1180 = 57.24

Ending inventory : 1180-760= 420 units

Ending inventory cost : 420*57.24 = 24039.66

d) Calculation of ending inventory using specific identification

Particulars Units Unit cost Total Purchased on 18th Mar 100 60 6000 Purchased on 25th Mar 320 62 19840 Total 420 25840

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