Pump It, Inc., sells weight lifting equipment. The sales and inventory records of the company for January through March 2003 were as follows:
|
Weight Sets |
Unit Cost |
Total Cost |
|
|
Beginning inventory, Jan. 1 |
460 |
30 |
$13,800 |
|
Purchase, Jan. 16 |
110 |
32 |
3,520 |
|
Sale, Jan. 25 ($45 per set). . |
216 |
||
|
Purchase, Feb. 16 |
105 |
36 |
3,780 |
|
Sale, Feb. 27 ($40 per set). . |
307 |
||
|
Purchase, March 10 |
150 |
28 |
4,200 |
|
Sale, March 30 ($50 per set) |
$190 |
Required
1. Determine the amounts for ending inventory, cost of goods sold, and gross margin under the following costing alternatives. Use the perpetual inventory method. Round amounts to the nearest dollar.
a. FIFO
b. LIFO
c. Average cost (calculate unit costs to the nearest cent)
2. Interpretive Question: Which alternative results in the highest gross margin? Why?