Topanga Group began operations early in 2018. Inventory purchase information for
ID: 2558052 • Letter: T
Question
Topanga Group began operations early in 2018. Inventory purchase information for the quarter ended March 31, 2018, for Topanga's only product is provided below. The unit costs include the cost of freight. The company uses a periodic inventory system. Date of Purchase Jan. 7 Feb. 16 March 22 Units 5,000 12,000 17,000 34,000 Unit Cost $4.00 4.50 5.00 Total Cost $ 20,000 54,000 85,000 159,000 Totals Sales for the quarter, all at $7.00 per unit, totaled 20,000 units leaving 14,000 units on hand at the end of the quarter Required 1. Calculate Topanga's cost of goods sold for the first quarter using a. FIFO b. LIFO c. Average cost 2. Calculate Toponga's gross profit ratio for the first quarter using FIFO, LIFO, and Average cost. 3. Comment on the relative effect of each of the three inventory methods on the gross profit ratio Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below Req 1A Req 1B Req 1C Req 2 Req 3 Calculate Topanga's cost of goods sold for the first quarter using average cost. (Round your intermediate calculations to 4 decimal places for average cost method and final answers to the nearest whole number.) of Goods Available fo ost of Goods Sold -Average Ending Inventory - Average Cost Sale Cost Cost of Goods Available for Sale Average Cost AverageCost of #of units Unit Cost #of units sold Goods Sold # of units in ending inventory Average Cost per unit Ending Inventory Cost per Unit Beginning Inventory Purchases January 7 February 16 March 22 5,0004.0020,000 12,000 4.5054,000 17,000 585,000 34.000 Total 159,000 20,000 4.6800S 93,60014,000 4.6714 S 65,400Explanation / Answer
Calculate cost of goods sold under weighted average method :
Calculate gross profit ratio :
Average cost # of units unit cost cost of goods available for sale # of units average unit cost Cost of goods sold # of units average unit cost Ending inventory Beginning inventory Purchases January 7 5000 4 20000 feb 16 12000 4.5 54000 Mar 22 17000 5 85000 Total 34000 159000 20000 4.6765 93530 14000 4.6765 65470