Flyaway Company reported the following purchases and sales for its box kite: Dat
ID: 2369649 • Letter: F
Question
Flyaway Company reported the following purchases and sales for its box kite:
Date Activities Units Acquired at Cost Units Sold at Retail
May 1 Beginning Inventory 150 units @ $10.00
5 Purchase 220 units @ $12.00
10 Sales 140 units @ $20.00
15 Purchase 100 units @ $13.00
24 Sales 150 units @ $21.00
(A) What is the cost assigned to the ending inventory using FIFO. (B) What is the gross profit using FIFO. (C) What is the cost assigned to ending inventory using LIFO. (D) What is the gross profit using LIFO. (E) Why would a company want a low gross profit?
***Please show work when calculating the answers, please post actual number answers and not just an equation***
Explanation / Answer
a) may 10 slaes 140 units , henc inventory consistes of 230 units , const of these sales = 140 * 10 = 1400
may 24 sales 150 from 230 units from may 10 and 100 units from purchase n may 15
cost of these sales = 10 * 10 + 140 * 12 =1780
hence the inventory consits of 330-150 =180 units
remaining inventory cost = 80 * 12 + 100 * 13 = 2260
hence cost of ending inventory = 1400 + 1780 + 2260 =5440