Topanga Group began operations early in 2021. Inventory purchase Information for the quarter ended March 31, 2021, for Topanga's only product is provided below. The unit costs Include the cost of freight. The company uses a periodic Inventory system to report Inventory and cost of goods sold. Date of Purchase Jan. 7 Feb. 16 March 22 Totals Units 2,eee 10,000 14,00 26,000 Unit Cost $2.00 3.00 4.ee Total Cost $ 4,280 30, eee 56,080 $90,000 Sales for the quarter, all at $9 per unit, totaled 16,000 units leaving 10,000 units on hand at the end of the quarter. Required: 1. Calculate Topanga's cost of goods sold for the first quarter using: a. FIFO b. LIFO C. Average cost 2. Calculate Topanga's gross profit ratio for the first quarter using FIFO, LIFO, and Average cost. 3. Comment on the relative effect of each of the three Inventory methods on the gross profit ratio. Reg 1A Reg 1B Reg 10 Reg 2 Reg 3 Calculate Topanga's cost of goods sold for the first quarter using FIFO. FIFO: Cost of Goods Available for Sale Cost of Goods Sold - Periodic FIFO Cost of Goods # of units # of units Cost of Cost per Available for unit Sale sold unit Goods Sold Cost per Ending Inventory - Periodic FIFO # of units Ending in ending unit inventory Inventory S 0.00 Cost per 0 $ 0.00 $ 2,000 $ 2.00 4.000 $ 2.00 S 2.00 Beginning Inventory Purchases: January 7 February 16 March 22 Total 10.000 $ 3.00 S 3.00 $ 3.00 $ 4.00 30.000 56.000 90.000 $ 4.00 S 14,000 26.000 4.00 $ Reg 1A Req 1B Reg 10 Reg 2 Reg 3 Ending Inventory - Periodic LIFO # of units in ending Cost per Ending unit inventory Inventory S 0.00 sold Calculate Topanga's cost of goods sold for the first quarter using LIFO. Cost of Goods Available for Sale Cost of Goods Sold - Periodic LIFO LIFO Cost of Goods # of units Cost per # of units Available for Cost per Cost of unit unit Sale Goods Sold Beginning Inventory $ 0 $ 0.00 Purchases: January 7 2,000 $ 2.00 4.000 $ February 16 10.000 $ 3.00 30.000 $ 3.00 March 22 14.000 $ 4.00 56.000 $ 4.00 Total 26.000 $ 90.000 2.00 S 2.00 3.00 S s 4.00 Reg 1A Reg 1B Req 10 Reg 2 Reg 3 Calculate Topanga's cost of goods sold for the first quarter using average cost. (Round average cost per unit to 4 decimal places.) Cost of Goods Available for Sale Cost of Goods Sold - Average Cost Ending Inventory - Average Cost Average Cost Unit Cost of Goods Average # of units Cost of # of units Average # of units Available for Cost Cost per in ending Ending Cost per Goods Sold Sale sold Unit inventory unit Inventory Beginning Inventory Purchases: January 7 2,000 $ 2.00 $ 4.000 February 10 10.000 $ 3.00 30.000 March 22 14.000 $ 4.00 56.000 Total 26.000 90.000 $ Req 1A Reg 1B Reg 10 Reg 2 Reg 3 Calculate Topanga's gross profit ratio for the first quarter using FIFO, LIFO, and Average cost. Choose Numerator: = Choose Denominator: Gross Profit Ratio = Gross profit ratio FIFO LIFO Average cost Reg 14 Reg 1B Reg 10 Reg 2 Reg 3 Comment on the relative effect of each of the three inventory methods on the gross profit ratio. In situations when costs are rising. LIFO results in a cost of goods sold and therefore, a gross profit ratio than FIFO
