Question

Hemming uses a periodic inventory system. (a) Determine the costs assigned to ending inventory and to cost of goods sold using FIFO. (b) Determine the costs assigned to ending inventory and to cost of goods sold using LIFO. (c) Compute the gross margin for each method.

Answer 1

Answer:

(a) Determine the costs assigned to ending inventory and to cost of goods sold using FIFO.

Cost of Inventory 4,900

Cost of goods sold 13850

(b) Determine the costs assigned to ending inventory and to cost of goods sold using LIFO.

Cost of Inventory 6,300

Cost of goods sold 12450

(c) Compute the gross margin for each method.

Sales = 36,000

FIFO

Gross profit Margin = (36000 - 13850) / 36000 = 61.5%

Gross profit Margin = (36000 - 12450) / 36000 = 65.4%

Explanation:

The working is attached in an MS Excel file with this answer. Please find it.