Answer:
The correct answer is A.
Explanation:
Giving the following information:
June 1: $780/150 units= $5.2 per unit
June 10: $1,170/200 units= $5.85 per unit
June 15: $1,260/200= $6.3 per unit
June 28: $990/150= $6.6 per units
A physical count of merchandise inventory on June 30 reveals that there are 210 units on hand.
Units sold= total units - ending inventory
Units sold= (150 + 200 + 200 + 150) - 210= 490 units
<u>The method with the lowest cost of goods sold will have the highest income:</u>
FIFO (first-in, first-out):
COGS= 150*5.2 + 200*5.85 + 140*6.3= $2,832
LIFO /last-in, first-out)
COGS= 150*6.6 + 200*6.3 + 140*5.85= $3,069
Weighted-average:
Weighted-average price= (5.2 + 5.85 + 6.3 + 6.6)/4= 5.99
COGS= 490*5.99= $2,935.1
The inventory method that will provide the highest gross profit is FIFO.
