E6-4 Ohsweken Outdoor Stores Inc. uses a perpetual inventory system and has a be

Question

E6-4 Ohsweken Outdoor Stores Inc. uses a perpetual inventory system and has a beginning inventory, as at April 1, od 150 tents. This consists of 50 tents at a cost of $210 each and 100 tents at a cost of $225 each. During April, the compan had the following purchases and sales of tents: Purchases Sales Date Units Unit Price Apr. 3 10 17 24 30 75 250 200 $400 400 400 200 $275 300 290 Instructions (a) Determine the cost of goods sold and the cost of the ending inventory using FIFO. (b) Calculate Ohsweken Outdoors's gross profit and gross profit margin for the month of April. (c) Is the gross profit determined in part (b) higher or lower than it would be if Ohsweken Outdoors had us cost method? Explain. ed the averg

Explanation / Answer

FIFO(perpetual) date purchase cost of goods sold Ending Inventory units per unit total units per unit total units per unit total Beg bal 50 210 10500 100 225 22500 3-Apr 50 210 10500 25 225 5625 75 225 16875 10-Apr 200 275 55000 75 225 16875 200 275 55000 17-Apr 75 225 16875 175 275 48125 25 275 6875 24-Apr 300 290 87000 25 275 6875 300 290 87000 30-Apr 25 275 6875 175 290 50750 125 290 36250 total 525 138750 36250 b) Gross profit = total sales - cost of goods sold total sales 3-Apr 75 units $400= 30000 17-Apr 250 units $400= 100000 30-Apr 200 units $400= 80000 total sales 210000 Gross profit = 210,000-138,750 71250 gross profit margin = gross profit/sales 0.339286 33.93%

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