Creative Kaos carries a large inventory of guitars and other musical instruments. The store uses a perpetual inventory system Company records indicate the following for a particular line of guitars Date Item Quantity Unit Cost Jun 1 Balance 4 $1,040 6 Sale 2 8 Purchase 13 974 17 Sale 4 30 Purchase 8 974 The sale price of each guitar was $1,760 (Click the icon to view the cost of goods sold calculation from the FIFO perpetual inventory record.) Click the icon to view the cost of goods sold calculation from the moving-weighted average-cost perpetual inventory record.) Required Calculate the gross margin for Creative Kaos Store under both the FIFO and the moving weighted average cost methods Explain why the gross margin is higher under the moving weighted average-cost method Gross margin under weighted average cost m - X FIFO Perpetual Inventory Record costs a etu Date Quantity Unit Cost Total Cost 6 2. 1,040 2,080 eig Jun 17 1,040 IN 2 2 2080 1,948 17 974 ng- od Total 6 6,108 Print Done Moving-Weighted-Average Cost Perpetual Inventory Record th Date ti Jun Quantity Unit Cost Total Cost 6 2 1,040.00 2,080 17 4 982.80 2,080 D ra Total 6 6,011 Print Done Gross margin under FIFO is $ Gross margin under weighted average-cost is $ counts The moving-weighted average-cost method produces a cost of goods sold (and therefore a higher gross margin) because unit inventory costs are in this scenario While the earlier inventory first, the method uses all inventory on hand in determining the cost of goods sold