Question
EcoGoods Ltd. uses a periodic inventory system. It entered into the following transactions for August. Date Activities Units Acquired at Cost Units Sold at Retail
EcoGoods Ltd. uses a periodic inventory system. It entered into the following transactions for August.
Date | Activities | Units Acquired at Cost | Units Sold at Retail |
Aug. 1 | Beginning inventory | 220 units @ $65 per unit | |
Aug. 6 | Purchase | 460 units @ $70 per unit | |
Aug. 12 | Sales | 420 units @ $95 per unit | |
Aug. 18 | Purchase | 300 units @ $75 per unit | |
Aug. 26 | Sales | 280 units @ $105 per unit |
For specific identification, the August 12 sale consisted of 100 units from beginning inventory and 320 units from the August 6 purchase; the August 26 sale consisted of 150 units from the August 18 purchase and 130 units from the August 6 purchase.
Required:
- Compute the cost of goods sold and ending inventory using FIFO and LIFO methods.
- Determine the weighted average cost per unit and the ending inventory value.
- Analyze the financial performance of EcoGoods Ltd. under different inventory costing methods.
- Provide a strategic recommendation on the optimal inventory costing method for EcoGoods Ltd., supported by financial analysis and industry trends.
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