Principles of Accounting Volume 1
19th Edition
ISBN: 9781947172685
Author: OpenStax
Publisher: OpenStax College
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Textbook Question
Chapter 10, Problem 1PA
When prices are rising (inflation), which costing method would produce the highest value for gross margin? Choose between first-in, first-out (FIFO); last-in, first-out (LIFO); and weighted average (AVG). Evansville Company had the following transactions for the month.
Calculate the gross margin for each of the following cost allocation methods, assuming A62 sold just one unit of these goods for $10,000. Provide your calculations.
A. first-in, first-out (FIFO)
B. last-in, first-out (LIFO)
C. weighted average (AVG)
Expert Solution & Answer
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Students have asked these similar questions
When prices are falling (deflation), which costing method would produce the highest
gross margin for the following? Choose first-in, first-out (FIFO); last-in, first-out (LIFO); or
weighted average, if ABC Company had the following transactions for the month.
Purchase
Purchase
Purchase
A.
B.
C.
Number of Units
10
20
10
40
Calculate the gross margin for each of the following cost allocation methods, assuming
ABC Company sold just one unit of these goods for $400. Provide your calculations.
Cost per Unit
$200
205
230
first-in, first-out (FIFO)
last-in, first-out (LIFO)
weighted average (AVG)
Cost of Goods Sold
As an accountant for Lee Company, your supervisor gave you the following calculations of the gross profit for the first quarter:
Alternative
Sales ($50 per unit)
Cost of Goods Sold
Gross Profit
A
$500,000
$200,000
$300,000
B
500,000
228,000
272,000
C
500,000
213,333
286,667
The three alternative cost flow assumptions are FIFO, average, and LIFO (the alternatives are not necessarily presented in this sequence). Lee uses the periodic inventory system. The computation of the cost of goods sold under each alternative is based on the following data:
Units
Cost/Unit
Inventory, January 1
12,000
$20
Purchase, January 10
4,000
21
Purchase, February 15
6,000
22
Purchase, March 10
8,000
23
1. Prepare schedules proving the cost of goods sold shown here under each of the three alternatives. For average cost.
LEE COMPANY
Schedules of Cost of Goods Sold
For First Quarter Ended March 31
FIFO
LIFO
Average
Beginning…
Using the variable cost method of applying the cost-plus approach to product pricing, determine the selling price for 22,500 units using the following data: variable cost
per unit, $15; total fixed costs, $180,000; and desired profit, $225,000. Do not round intermediate calculations. Round your answer to the nearest whole dollar.
Chapter 10 Solutions
Principles of Accounting Volume 1
Ch. 10 - If a company has four lots of products for sale,...Ch. 10 - If a company has three lots of products for sale,...Ch. 10 - When inventory items are highly specialized, the...Ch. 10 - If goods are shipped FOB destination, which of the...Ch. 10 - On which financial statement would the merchandise...Ch. 10 - When would using the FIFO inventory costing method...Ch. 10 - Which accounting rule serves as the primary basis...Ch. 10 - Which type or types of inventory timing system...Ch. 10 - Which of these statements is false? A. If cost of...Ch. 10 - Which inventory costing method is almost always...
Ch. 10 - Which of the following describes features of a...Ch. 10 - Which of the following financial statements would...Ch. 10 - Which of the following would cause periodic ending...Ch. 10 - Which of the following indicates a positive trend...Ch. 10 - What is meant by the term gross margin?Ch. 10 - Can a business change from one inventory costing...Ch. 10 - Why do consignment arrangements present a...Ch. 10 - Explain the difference between the terms FOB...Ch. 10 - When would a company use the specific...Ch. 10 - Explain why a company might want to utilize the...Ch. 10 - Describe the goal of the lower-of-cost-or-market...Ch. 10 - Describe two separate and distinct ways to...Ch. 10 - Describe costing inventory using first-in,...Ch. 10 - Describe costing inventory using last-in,...Ch. 10 - Describe costing inventory using weighted average....Ch. 10 - How long does it take an inventory error affecting...Ch. 10 - What type of issues would arise that might cause...Ch. 10 - Explain the difference between the flow of cost...Ch. 10 - 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When prices are rising (inflation), which costing...Ch. 10 - Trini Company had the following transactions for...Ch. 10 - Trini Company had the following transactions for...Ch. 10 - Calculate the cost of goods sold dollar value for...Ch. 10 - Use the first-in, first-out (FIFO) cost allocation...Ch. 10 - Use the last-in, first-out (LIFO) cost allocation...Ch. 10 - Use the weighted-average (AVG) cost allocation...Ch. 10 - Prepare journal entries to record the following...Ch. 10 - Calculate a) cost of goods sold, b) ending...Ch. 10 - Calculate a) cost of goods sold, b) ending...Ch. 10 - Calculate a) cost of goods sold, b) ending...Ch. 10 - Compare the calculations for gross margin for A76...Ch. 10 - Company Elmira reported the following cost of...Ch. 10 - Assuming a companys year-end inventory were...Ch. 10 - Use the following information relating to Shana...Ch. 10 - Use the following information relating to Clover...Ch. 10 - When prices are falling (deflation), which costing...Ch. 10 - DeForest Company had the following transactions...Ch. 10 - DeForest Company had the following transactions...Ch. 10 - Calculate the cost of goods sold dollar value for...Ch. 10 - Use the first-in, first-out method (FIFO) cost...Ch. 10 - Use the last-in, first-out method (LIFO) cost...Ch. 10 - Use the weighted-average (AVG) cost allocation...Ch. 10 - Prepare journal entries to record the following...Ch. 10 - Calculate a) cost of goods sold, b) ending...Ch. 10 - Calculate a) cost of goods sold, b) ending...Ch. 10 - Calculate a) cost of goods sold, b) ending...Ch. 10 - Compare the calculations for gross margin for B76...Ch. 10 - Company Edgar reported the following cost of goods...Ch. 10 - Assuming a companys year-end inventory were...Ch. 10 - Use the following information relating to Singh...Ch. 10 - Use the following information relating to Medinas...Ch. 10 - Assume your company uses the periodic inventory...Ch. 10 - Consider the dilemma you might someday face if you...Ch. 10 - Use a spreadsheet and the following excerpts from...
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