On January 1, The Big Kids Store had a beginning inventory of 150 units of the RC Spitfire-MK IIB model airplane at a cost of $65 per unit. During the year, purchases were as follows: ? ?

The Big Kids Store uses a periodic inventory system. At the end of the year, there were 20 units on hand.

Instructions

a. Determine the cost of goods available for sale.

b. During the year, The Big Kids Store sold the RC Spitfire for $135 per unit. Calculate the number of units sold during the year and total sales revenue.

c. Determine the ending inventory and the cost of goods sold using (1) FIFO and (2) weighted average.

d. Calculate gross profit using FIFO and weighted average.

The owner of The Big Kids Store would like to minimize profit. Last year, prices were falling and The Big Kids Store used FIFO. This year she would like to switch to weighted average. Do you recommend this change or not? Explain.

Transcribed Image Text:

Units Unit Cost Feb. 17 70 $65 Apr. 12 July 10 Oct. 26 40 66 30 68 25 70