Question
Cast Iron Grills, Incorporated, manufactures premium gas barbecue grills. The company reports inventory and cost of goods sold based on calculations from a LIFO periodic
Cast Iron Grills, Incorporated, manufactures premium gas barbecue grills. The company reports inventory and cost of goods sold based on calculations from a LIFO periodic inventory system. Cast Irons December 31, 2024, fiscal year-end inventory consisted of the following (listed in chronological order of acquisition):
Units | Unit Cost |
---|---|
5,200 | $ 600 |
4,100 | 700 |
6,200 | 800 |
The replacement cost of the grills throughout 2025 was $900. Cast Iron sold 28,000 grills during 2025. The company's selling price is set at 200% of the current replacement cost.
Required:
1. & 2. Compute the gross profit (sales minus cost of goods sold) and the gross profit ratio for 2025 under two different assumptions. First, that Cast Iron purchased 29,000 units and, second, that Cast Iron purchased 15,500 units during the year.
Purchased Units | Gross Profit | Gross Profit Ratio |
29000 | % | |
15500 | % |
4. Compute the gross profit (sales minus cost of goods sold) and the gross profit ratio for 2025 assuming that Cast Iron purchased 29,000 units (as per the first assumption) and 15,500 units (as per the second assumption) during the year and uses the FIFO inventory cost method rather than the LIFO method.
Purchased Units | Gross Profit | Gross Profit Ratio |
29000 | % | |
15500 | % |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started