Some of the information found on a detailed inventory card for Soave Stationery Ltd. for May is as follows:

Instructions
(a) From the above data, calculate the ending inventory perpetual inventory records are kept in units only and unit costs to the nearest cent and ending inventory to
1. First-in, first-out (FIFO)
2. Weighted average cost based on each of the following cost formulas. Assume that average cost is calculated monthly at each month end. Carry the nearest dollar.
(b) Based on your results in part (a), and assuming that the average selling price per unit during May was $7.25, pre- pare partial income statements up to the "gross profit on sales" line. Calculate the gross profit percentage under each inventory cost formula. Comment on your results.
(c) Assume the perpetual inventory record is kept in dollars, and costs are calculated at the time of each withdrawal. Recalculate the amounts under this revised assumption, carrying average unit costs to four decimal places. Would the ending inventory amounts under each of the two cost formulas above be the same? Explain.

Transcribed Image Text:

Received Issued Balance Date No. of Units Unit Cost $2.90 3.00 No. of Units No. of Units May 1 (opening balance) 1,150 1,050 600 1,000 1,300 1,500 1,150 2,200 1,500 2,100 1,600 2,300 1,200 2,500 1,700 3,200 1,900 700 10 13 18 20 23 26 28 31 3.20 3.30 3.40 3.60 500 300 1,100 800 1,300