Requirements 1 2 and 3 Compute cost of goods sold and gross

Requirements 1, 2, and 3. Compute cost of goods sold and gross profit using FIFO, LIFO, and average cost methods.(Round average cost per unit to the nearest cent and all other amounts to the nearest dollar.) FIFO 1 Data Table Cost of goods sold 38 tires 130 16 tires 135 ....43 tires 224 Purchase .. Print Done

Solution

Answer:

FIFO:

Units Sold = 43 tires

Cost of Goods Sold = (38*$130) + (5*$135)
Cost of Goods Sold = $4,940 + $675
Cost of Goods Sold = $5,615

Sales Revenue = 48 * $224
Sales Revenue = $10,752

Gross Profit = Sales Revenue – Cost of Goods Sold
Gross Profit = $10,752 - $5,615
Gross Profit = $5,137

LIFO:

Cost of Goods Sold = (16*$135) + (27*$130)
Cost of Goods Sold = $2,160 + $3,510
Cost of Goods Sold = $5,670

Sales Revenue = 48 * $224
Sales Revenue = $10,752

Gross Profit = Sales Revenue – Cost of Goods Sold
Gross Profit = $10,752 - $5,670
Gross Profit = $5,082

Average Cost Method:

Cost of Goods Available for Sale = Beginning Inventory + Purchases
Cost of Goods Available for Sale = (38*$130) + (16 * $135)
Cost of Goods Available for Sale = $4,940 + $2,160
Cost of Goods Available for Sale = $7,100

Weighted Average Cost per unit = Cost of Goods Available for Sale / Units available for sales
Units available for sales = 38 tires+ 16 tires = 54 tires
Weighted Average Cost per unit = 7,100 / 54
Weighted Average Cost per unit = $131.48

Units Sold = 43 tires
Cost of Goods sold = $131.48 * 43
Cost of Goods Sold = $5,653.64

Sales Revenue = 48 *224
Sales Revenue = $10,752

Gross Profit = Sales Revenue – Cost of Goods Sold
Gross Profit = $10,752 - $5,653.64
Gross Profit = $5,098.36