Nathan€™s Grills, Inc., imports and sells premium-quality gas grills. The company had the following layers in its LIFO inventory at January 1, 2014, at which time the replacement cost of the inventory was $675 per unit.

The replacement cost of grills remained constant throughout 2014. Nathan€™s sold 275 units during 2014. The company established the selling price of each unit by doubling its replacement cost at the time of sale.

Required:
1. Determine gross margin and the gross margin percentage for 2014 assuming that Nathan€™s Grills purchased 280 units during the year.
2. Determine gross margin and the gross margin percentage for 2014 assuming that Nathan€™s Grills purchased 180 units during the year.
3. Explain why the assumed number of units purchased makes a difference in youranswers.

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Year LIFO Layer Added 2011 2012 2013 Units 50 40 60 Unit Cost S450 500 600