Nathans Grills, Inc., imports and sells premium-quality gas grills. The company had the following layers in its
Question:
Nathan’s Grills, Inc., imports and sells premium-quality gas grills. The company had the following layers in its LIFO inventory at January 1, 20X4, at which time the replacement cost of the inventory was $675 per unit.
The replacement cost of grills remained constant throughout 20X4. Nathan’s sold 275 units during 20X4. 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 20X4 assuming that Nathan’s Grills purchased 280 units during the year.
2. Determine gross margin and the gross margin percentage for 20X4 assuming that Nathan’s Grills purchased 180 units during the year.
3. Explain why the assumed number of units purchased makes a difference in your answers.
Step by Step Answer:
Financial Reporting And Analysis
ISBN: 9781260247848
8th Edition
Authors: Lawrence Revsine, Daniel Collins, Bruce Johnson, Fred Mittelstaedt, Leonard Soffer