Excercise 10-13 Identifying effects of a LIFO liquidation (LO10-6)

Nathans Grills, Inc., imports and sells premium-quality gas grills. The company had the following layers in its LIFO inventory at January 1, 20X4, at which time the replacement cost of the inventory was $675 per unit.

Year LIFO Layer Added	Units	Unit Cost
20X1	50	$	450
20X2	40		500
20X3	60		600

The replacement cost of grills remained constant throughout 20X4. Nathans sold 275 units during 20X4. The company established the selling price of each unit by doubling its replacement cost at the time of sale.

Required:

1. Determine gross margin and the gross margin percentage for 20X4 assuming that Nathans Grills purchased 280 units during the year.

Determine gross margin and the gross margin percentage for 20X4 assuming that Nathans Grills purchased 180 units during the year.

(Round your "Gross Margin Percentage" answer to 3 decimal places. (Example, 0.254 instead of 25.4%))

LIFO Gross Margin Gross Margin Percentage

1 ? ?

2 ? ?