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Question - Kettle Company made the following purchases of Product A in its first year of operations:
Units
Units cost
January 2
1600
8.50
March 31
1400
9.00
July 5
2600
8.80
November 1
8.60
The ending inventory that year consisted of 2,600 units. Kettle uses periodic inventory procedure.
1. Compute the cost of the ending inventory using each of the following methods: (1) FIFO, (2) LIFO, and (3) weighted average.
2. Which method would yield the highest amount of gross margin? Explain why it does.
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