Inventory Pools The Stone Shoe Company adopted dollar value LIFO on January 1, 2007. The company produces four products and uses a single inventory pool. The company’s beginning inventory consists of the following:
|
Type |
Quantity |
Cost per Unit |
Total Cost |
|
Running |
80,000 |
$16 |
$1,280,000 |
|
Tennis |
30,000 |
15 |
450,000 |
|
Basketball |
60,000 |
14 |
840,000 |
|
Soccer |
40,000 |
17 |
680,000 |
|
210,000 |
$3,250,000 |
During 2007, the company has the following purchases and sales:
|
Type |
Quantity Purchased |
Cost per Unit |
Quantity Sold |
Selling Price per Unit |
|
Running |
150,000 |
$19 |
140,000 |
$40 |
|
Tennis |
130,000 |
16 |
100,000 |
38 |
|
Basketball |
100,000 |
14 |
90,000 |
37 |
|
Soccer |
120,000 |
18 |
140,000 |
42 |
|
500,000 |
470,000 |
Required
1. Compute the LIFO cost of the ending inventory. (Round the cost index to 4 decimal places.)
2. By how much would the company’s gross profit be different if it had used four pools instead of a single pool?