Question
Marigold-Mart Centre Inc. opened for business on May 1, and uses a perpetual inventory system. During May, the company had the following purchases and sales
Marigold-Mart Centre Inc. opened for business on May 1, and uses a perpetual inventory system. During May, the company had the following purchases and sales for one of its products:
Purchases | Sales | |||||||||
Date | Units | Unit Cost | Units | Unit Price | ||||||
May | 1 | 120 | $100 | |||||||
3 | 80 | $252 | ||||||||
8 | 100 | 109 | ||||||||
13 | 80 | 275 | ||||||||
15 | 60 | 114 | ||||||||
20 | 60 | 301 | ||||||||
27 | 40 | 326 |
Determine the cost of goods sold and cost of ending inventory using (1) FIFO and (2) average cost. (Round Average answers to 2 decimal places, e.g. 5.75.)
FIFO | Average | ||||
Cost of Goods Sold | $ | $ | |||
Ending Inventory | $ | $ |
Identify the cost formula the company should use if it wants to maximize gross profit and net income? (options: FIFO, average, neither)
Which cost formula produces the higher ending inventory valuation? (options: FIFO, average, neither)
Which cost formula produces the higher cash flow? (options: FIFO, average, neither)
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