Question

Exercise 8-13

Presented below is information related to Blowfish radios for the Tamarisk Company for the month of July.

Date		Transaction		Units In		Unit Cost		Total		Units Sold		Selling Price		Total
July 1		Balance		160		$3.90		$  624
6		Purchase		1,280		4.00		5,120
7		Sale								480		$7.00		$ 3,360
10		Sale								480		7.30		3,504
12		Purchase		640		4.30		2,752
15		Sale								320		7.40		2,368
18		Purchase		480		4.40		2,112
22		Sale								640		7.40		4,736
25		Purchase		800		4.38		3,504
30		Sale								320		7.50		2,400
		Totals		3,360				$14,112		2,240				$16,368

Calculate average cost per unit. (Round answer to 2 decimal places, e.g. 2.76.)

Weighted-average cost

$

Assuming that the periodic inventory method is used, compute the inventory cost at July 31 under each of the following cost flow assumptions. (Round answers to 0 decimal places, e.g. 6,578.)

(1) FIFO.
(2) LIFO.
(3) Weighted-average.

		(1) FIFO		(2) LIFO		(3) Weighted-Average
Ending Inventory at July 31		$		$		$

Which of the methods used above will yield the lowest figure for gross profit for the income statement? LIFOWeighted-averageFIFO method will yield the lowest gross profit.

Which of the methods used above will yield the lowest figure for ending inventory for the balance sheet?

FIFOLIFOWeighted-average

method will yield the lowest ending inventory.

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Answer 1

Calculate average cost per unit. (Round answer to 2 decimal places, e.g. 2.76.) Weighted-average cost $14112/3360 = 4.20

(1) FIFO (2) LIFO (3) Weighted-Average Ending Inventory at July 31 $3504+320*4.4 = 4912 $624+960*4 = 4464 1120*4.2 = 4704

Which of the methods used above will yield the lowest figure for gross profit for the income statement? LIFO method will yield the lowest gross profit.

Which of the methods used above will yield the lowest figure for ending inventory for the balance sheet? LIFO method will yield the lowest ending inventory. Click if you would like to Show Work for this question: Open Show Work