Question

You have the following information for Oriole Company. Oriole uses the periodic method of accounting for its inventory transactions. Oriole only carries one brand and size of diamonds—all are identical. Each batch of diamonds purchased is carefully coded and marked with its purchase cost.

March 1 Beginning inventory 160 diamonds at a cost of $320 per diamond.

March 3 Purchased 210 diamonds at a cost of $360 each.

March 5 Sold 175 diamonds for $610 each.

March 10 Purchased 335 diamonds at a cost of $385 each.

March 25 Sold 380 diamonds for $660 each.

B.Assume that Oriole uses the FIFO cost flow assumption. Calculate cost of goods sold. How much gross profit would the company report under this cost flow assumption?

C. Assume that Oriole uses the LIFO cost flow assumption. Calculate cost of goods sold. How much gross profit would the company report under this cost flow assumption?

Answer 1

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