Problem 5-3A (Algo) Perpetual: Alternative cost flows LO P1

Montoure Company uses a perpetual inventory system. It entered into the following calendar-year purchases and sales transactions.

Date	Activities	Units Acquired at Cost			Units Sold at Retail
January 1	Beginning inventory	660	units	@ $60 per unit
February 10	Purchase	330	units	@ $57 per unit
March 13	Purchase	110	units	@ $45 per unit
March 15	Sales				715	units	@ $70 per unit
August 21	Purchase	160	units	@ $65 per unit
September 5	Purchase	570	units	@ $61 per unit
September 10	Sales				730	units	@ $70 per unit
	Totals	1,830	units		1,445	units

Required:

1. Compute cost of goods available for sale and the number of units available for sale.

2. Compute the number of units in ending inventory.

3. Compute the cost assigned to ending inventory using (a) FIFO, (b) LIFO, (c) weighted average, and (d) specific identification. (For specific identification, units sold consist of 660 units from beginning inventory, 230 from the February 10 purchase, 110 from the March 13 purchase, 110 from the August 21 purchase, and 335 from the September 5 purchase.)

4. Compute gross profit earned by the company for each of the four costing methods.

   Note: Round your average cost per unit to 2 decimal places.

5. The companys manager earns a bonus based on a percent of gross profit. Which method of inventory costing produces the highest bonus for the manager?

   multiple choice

   • LIFO

   • FIFO

   • Specific Identification

   • Weighted Average