Answer:
total revenue = 380 units x $88 = $33,440
Beginning inventory 120 units @ $40 = $4,800
Units purchased 330 units @ $44 = $14,520
total 450 units $19,320
Ending inventory consisted of 70 units.
COGS using LIFO = $19,320 - (70 units x $40) = $16,520
COGS using FIFO = $19,320 - (70 units x $44) = $16,240
COGS using weighted average = $19,320 - [70 units x ($19,320/450)] = $16,315
A. Compute the gross margin for Mason Company using the following cost flow assumptions:
1) FIFO ⇒ $33,440 - $16,240 = $17,200
2) LIFO ⇒ $33,440 - $16,520 = $16,920
3) Weighted average ⇒ $33,440 - $16,315 = $17,125
B. What is the amount of net income using FIFO,LIFO, and weighted average?
1) FIFO ⇒ $33,440 - $16,240 = $17,200 - $3,100 = $14,100
2) LIFO ⇒ $33,440 - $16,520 = $16,920 - $3,100 = $13,820
3) Weighted average ⇒ $33,440 - $16,315 = $17,125 - $3,100 = 14,025
C. Compute the amount of ending inventory using (1) FIFO, (2) LIFO, and (3) weighted average.
1) FIFO ⇒ 70 units x $44 = $3,080
2) LIFO ⇒ 70 units x $40 = $2,800
3) Weighted average ⇒ 70 units x ($19,320/450) = $3,005