Calculating ending inventory in both units amp dollars cost

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Reference no: EM13356554

Calculating Ending Inventory in both units & dollars, Cost of Goods sold, Commission to Manager & Gross Profit for the given period.

Parker Company uses a perpetual inventory system. It entered into the following calendar-year 2005 purchases and sales transactions:

Date	Activities	Units Aquired at Cost	Units sold at retail
Jan. 1	Beginning inventory	600 units @ $44/unit
Feb. 10	Purchase	200 units @ $40/unit
Mar. 13	Purchase	100 units @ $20/unit
Mar. 15	Sales		400 units @ $75/unit
Aug. 21	Purchase	160 units @ $60/unit
Sept. 5	Purchase	280 units @ $48/unit
Sept. 10	Sales		200 units @ $75/unit
	Totals	1,340 Units	600 units

Required

1. Compute cost of goods available for sale and the number of units available for sale.

2. Compute the number of units in ending inventory.

3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) specific identification

(Note: The units sold consist of 500 units from beginning inventory and 100 units from the

March 13 purchase), and (d) weighted average.

4. Compute the gross profit earned by the company for each of the four costing methods in part 3.

Analysis Component

5. If the company's manager earns a bonus based on a percent of gross profit, which method of inventory costing will the manager likely prefer?

Reference no: EM13356554

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