1. Gamma Retail

Scenario: Inventory Management and Costing

Data:

• Beginning Inventory: 5,000 units at $10 per unit
• Purchases:
  • January: 3,000 units at $12 per unit
  • April: 2,500 units at $15 per unit

• Sales:
  • February: 4,000 units
  • May: 3,500 units

• Ending Inventory: 3,000 units

Requirements:

1. Calculate Gamma Retail's cost of goods sold (COGS) using the FIFO method.
2. Determine the value of ending inventory using the FIFO method.
3. Analyze the impact of inventory costing methods on Gamma Retail's financial statements and profitability.
4. Recommend strategies for improving inventory turnover and reducing carrying costs.
5. Discuss the advantages and disadvantages of using the LIFO method for inventory valuation.
6. Evaluate the impact of a 15% increase in sales on Gamma Retail's inventory turnover ratio.