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A wholesale distributor uses the FIFO method for inventory valuation. Beginning inventory consisted of 5,000 units at $10/unit. During the period, the company purchased 10,000
A wholesale distributor uses the FIFO method for inventory valuation. Beginning inventory consisted of 5,000 units at $10/unit. During the period, the company purchased 10,000 units at $12/unit. Ending inventory consists of 3,000 units.
- Requirements:
- Calculate the cost of goods sold (COGS) and ending inventory value using the FIFO method.
- Determine the gross profit and gross profit margin for the period.
- Discuss the advantages and disadvantages of the FIFO method compared to other inventory valuation methods.
- Recommend inventory management strategies based on the COGS calculation.
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