Question

Squire Industries had 470 units of “Car” in its inventory at a cost of $4 each....

Squire Industries had 470 units of “Car” in its inventory at a cost of $4 each. It purchased, for $2790, 310 more units of “Car”. Squire then sold 390 units at a selling price of $11 each, resulting in a gross profit of $1958. The cost flow assumption used by Squire

is FIFO.
is LIFO.
is weighted average.
cannot be determined from the information given.
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Homework Answers

Answer #1

OPTION C------ WEIGHTED AVERAGE

Calculation of COGS under different 3 methods

FIFO

Out of opening inventory----390*4=1560

LIFO

Out of purchases---310*9 =2790

Out of opening stock----80*4=320

Total =3110

Weighted average

Weighted average per unit =470*4 +2790/(470+310) =5.98

COGS= 390*5.98 =2332

Calculation of gross profit under all methods

FIFO LIFO Weighted avg
Sales 4290 4290 4290
Less- COGS 1560 3110 2332
Gross Profit 2730 1180 1958

Therefore, weighted average is answer

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