Jessica is considering putting $50 into a money market account that pays a 4 percent annual interest rate. It will take year(s)
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Answer:
1-3 Attached inventory record schedule based on FIFO, LIFO and WEIGHTED AVERAGE method
4. COST OF GOODS SOLD
FIFO $6,070
LIFO $6,165
WA $6,080
5. GROSS PROFIT
FIFO $5,235
LIFO $5,140
WA $5,225
6. FIFO method maximizes gross profit
Explanation:
Schedule for Inventory record is attached based on FIFO, LIFO and Weighted Average method.
FIFO - (First in, First out) this inventory method sells older inventory before the company sells the newly acquired.
LIFO - (Last in, First out) this inventory method sells the latest acquired inventory rather than the older one.
Weighted Average- This inventory method uses inventory cost by dividing total amount of inventory over total units sold.
4. COST OF GOODS SOLD
FIFO
August 3 45 x $35 = $1,575
August 21 5 x $35 = $175
80 x $54 = 4,320
TOTAL $6,070
LIFO
August 3 45 x $35 = $1,575
August 21 85 x $54 = $4,590
TOTAL $6,165
Weighted Average
August 3 45 x $35 = $1,575
August 21 85 x $53 = 4,505
TOTAL $6,080
5. Gross Profit
Total sales is $11,305 (45 x $85 = $3,825 + 85 x $88 = 7,480)
FIFO
Total sales - Cost Of Goods Sold = Gross profit
$11,305 - $6,070 = $5,235
LIFO
Total sales - Cost Of Goods Sold = Gross profit
$11,305 - $6,165 = $5,140
Weighted Average
Total sales - Cost Of Goods Sold = Gross profit
$11,305 - $6,080 = $5,225
6. FIFO maximizes gross profit profit among the 3 methods. It yields the highest profit for the month of August in the amount of $5,235
Answer:
Increase operating profit by $772,200
Explanation:
As for the provided information,
Details for special order are as follows:
It will require no additional operating expense whether fixed or variable in nature.
Further there is an idle capacity lying, to meet the order which will not require extra fixed manufacturing cost.
Total fixed cost in cost of goods sold = $2,268,400
Therefore total variable cost in cost of goods sold = $6,848,000 - $2,268,400 = $4,579,600
Average variable cost per unit = $4,579,600/428,000 = $10.70
Therefore, if the special order is accepted, which will cost only $10.70 per unit and be sold at $20.60 per unit.
It will add to operating profits as follows:
= 78,000 ($20.60 - $10.70) = $772,200