Problem 5-3A 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

Jan.

1

Beginning inventory

570

units

@ $50 per unit

Feb.

10

Purchase

380

units

@ $47 per unit

Mar.

13

Purchase

190

units

@ $35 per unit

Mar.

15

Sales

700

units

@ $75 per unit

Aug.

21

Purchase

200

units

@ $55 per unit

Sept.

5

Purchase

590

units

@ $53 per unit

Sept.

10

Sales

790

units

@ $75 per unit

Totals

1,930

units

1,490

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 570 units from beginning inventory, 280 from the February 10 purchase, 190 from the March 13 purchase, 150 from the August 21 purchase, and 300 from the September 5 purchase.

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

• FIFO

• Specific Identification

• LIFO

• Weighted Average

please show your work for all