At the beginning of its operations in March 2016, Mastiff Supplies Ltd. began with 7,500 units of

Question:

At the beginning of its operations in March 2016, Mastiff Supplies Ltd. began with 7,500 units of inventory that it purchased at a cost of $7.00 each. The company’s purchases during March were as follows:

March 13...........5,000 units @ $8.00

Sales during March:

March 2............. 5,000 units

March 20 ........... 2,800 units

Mastiff Supplies uses a perpetual inventory system.

Required:

a. Calculate the cost of goods sold for March using the weighted-average cost formula.

b. Calculate the cost of goods sold for March using the first-in, first-out cost formula.

c. Which of the two inventory cost formulas results in the greater gross margin for March?

d. Which of the two inventory cost formulas results in the larger inventory balance at the end of March?

e. Compare your answers in parts “c” and “d” above and comment on the relationship between these items.

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Understanding Financial Accounting

ISBN: 978-1118849385

1st Canadian Edition

Authors: Christopher Burnley, Robert Hoskin, Maureen Fizzell, Donald

Question Posted: