Weighted Average Cost Flow Method Under Perpetual Inventory System

The following units of a particular item were available for sale during the calendar year:

Jan. 1	Inventory	15,000	units at $60.00
Mar. 18	Sale	12,000	units
May 2	Purchase	27,000	units at $62.00
Aug. 9	Sale	22,500	units
Oct. 20	Purchase	10,500	units at $64.20

The firm uses the weighted average cost method with a perpetual inventory system. Determine the cost of merchandise sold for each sale and the inventory balance after each sale. Present the data in the form illustrated in Exhibit 5. Round unit cost to two decimal places, if necessary.

Perpetual Inventory Using FIFO

Beginning inventory, purchases, and sales data for portable game players are as follows:

Apr. 1		Inventory	65 units @ $78
10		Sale	45 units
15		Purchase	36 units @ $83
20		Sale	29 units
24		Sale	14 units
30		Purchase	37 units @ $87

The business maintains a perpetual inventory system, costing by the first-in, first-out method.

Question Content Area

a. Determine the cost of the merchandise sold for each sale and the inventory balance after each sale, presenting the data in the form illustrated in Exhibit 3. Under FIFO, if units are in inventory at two different costs, enter the units with the LOWER unit cost first in the Cost of Merchandise Sold Unit Cost column and in the Inventory Unit Cost column.

3) Periodic Inventory by Three Methods; Cost of Merchandise Sold

Lower-of-Cost-or-Market Inventory

Inventory Turnover and days sales in inventory :Kracker Corp., Foodstuff, Inc., and Winston Stores, Inc. are three grocery chains in the United States. Inventory management is an important aspect of the grocery retail business. Recent balance sheets for these three companies indicated the following merchandise inventory (in millions) information:

	Kracker Corp.	Foodstuff Inc.	Winston Stores
Cost of merchandise sold	$33,580.0	$33,215.0	$35,405.0
Inventory, beginning of year	1,951.3	2,042.0	1,498.7
Inventory, end of year	1,912.7	1,962.0	1,411.3

a. & b. Determine the inventory turnover and the number of days sales in inventory (use 365 days and round to the nearest day) for the three companies. Round all interim calculations to one decimal place. For days' sales in inventory, round final answers to the nearest day, and for inventory turnover, round to one decimal place.

Date Jan. 1 Mar. 18 May 2 Aug. 9 Oct. 20 Quantity Dec. 31 Balances Purchases Unit Cost Total Cost Perpetual Inventory Account Weighted Average Cost Flow Method Cost of Merchandise Sold Quantity Unit Cost Total Cost Quantity LA Inventory Unit Cost tA $ Total Cost Date Apr. 1 Apr. 10 Apr. 15 Apr. 20 Apr. 24 Apr. 30 Quantity Purchased Apr. 30 Balances Perpetual Inventory Account First-in, First-out Method Portable Game Players Quantity Cost of Merchandise Sold B 8 B Purchases Purchases Unit Total Cost Cost Cost of Cost of Merchandise Merchandise Sold Sold Unit Cost Total Cost Inventory Inventory Total Cost Inventory Unit Quantity Cost Periodic Inventory by Three Methods; Cost of Merchandise Sold The units of an item available for sale during the year were as follows: Jan. 1 Mar. 10 Inventory Purchase Purchase Aug. 30 Dec. 12 Purchase 40 units @ $108 70 units @ $118 20 units @ $124 70 units @ $128 There are 80 units of the item in the physical inventory at December 31. The periodic inventory system is used. Determine the inventory cost and the cost of merchandise sold by three methods. Round interim calculations to one decimal and final answers to the nearest whole dollar. Cost of Merchandise Inventory and Cost of Merchandise Sold Inventory Method Merchandise Inventory Merchandise Sold a. First-in, first-out (FIFO) $ b. Last-in, first-out (LIFO) c. Weighted average cost Lower-of-Cost-or-Market Inventory On the basis of the following data, determine the value of the inventory at the lower of cost or market. Assemble the data in the form illustrated in Exhibit 9. Market Value per Unit (Net Realizable Value) $188 Birch Inventory Item Cypress Mountain Ash Spruce Willow Total Inventory Item Birch Cypress Mountain Ash Spruce Willow Inventory Quantity 41 11 43 35 29 Cost per Unit $179 264 64 71 80 Inventory at the Lower of Cost or Market Total Cost Total Market Total LCM 275 71 60 75 Company names Kracker Foodstuff Winston Stores Inventory Turnover 16 X Days' Sales in Inventory days days days c. The inventory turnover ratios and days' sales in inventory are similar and a lower Stores in managing inventory. for Kracker and Foodstuff. Winston Stores has a higher days' sales in inventory than Kracker and Foodstuff. These results suggest that Kracker and Foodstuff are less million inventory turnover efficient than Winston d. If Kracker had Winston Stores' days' sales in inventory, how much additional cash flow would have been generated from the smaller inventory relative to its actual average inventory position? Round interim calculations to one decimal place and your final answer to the nearest million