Question
Exercise 7-6 Compute cost of ending inventory using the FIFO, LIFO, and weighted-average under the periodic inventory procedure (L.O. 3) Kettle Company made the following
Exercise 7-6
Compute cost of ending inventory using the FIFO, LIFO, and weighted-average under the periodic inventory procedure (L.O. 3)
Kettle Company made the following purchases of Product A in its first year of operations:
Units |
| Units Cost | |
January 2 | 1,400 | @ | $7.40 |
March 31 | 1,200 | @ | 7.00 |
July 5 | 2,400 | @ | 7.60 |
November 1 | 1,800 | @ | 8.00 |
The ending inventory that year consisted of 2,400 units. Kettle uses periodic inventory procedure.
a. Compute the cost of the ending inventory using each of the following methods: (1) FIFO, (2) LIFO, and (3) weighted-average.
b. Which method would yield the highest amount of gross margin? Explain why it does.
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