CASE STUDY 6 - INVENTORIES Phuong's decision to invest in the group of assets he located has allowed him to change the focus of his work slightly. Phuong will now have extra capacity to produce his signature sauce The Hot Stuff and has decided to create premium package which will be known as the Saucy Sixpack. This addition of an extra product has caused Phuong to review the way he records his inventory. Phuong has previously used the periodic system to record inventory as he found he didn't have to think too hard and only had to do a stock take every now and then. Phuong also recalled from his studies at University that ...the First-In First-Out (FIFO) method will record the highest ending inventory value... and has always made use of the FIFO method for that reason. Required 1. Phuong has provided you with information below and asked you to calculate the COGS and Gross Profit for the two items listed. Phuong began the month with no stock of either product. Phuong's latest stock take revealed that there were 325 units of Product 1 and 80 units of Product 2 still on hand. Product 1 - The Hot Stuff is an individual container of all-purpose dipping sauce produced using one of Phuong's family recipes. Each unit now sells for $2.50 Date Purchases (units) Sales (units) August 3 3692222222 1000 @ $0.80 150 450 11 350 @ $0.90 14 300 16 250 @ $1.05 18 150 21 300 24 400 @ $1.00 300 @ $1.10 28 275 175 31 (150) @ $1 (Returned) TOTAL 2150 1800