Kettle Company made the following purchases of Product A in its first year of operations:
|
Units |
Unit Cost |
|
|
2-Jan |
1,400 |
@ $7.40 |
|
31-Mar |
1,200 |
@ 7.00 |
|
5-Jul |
2,400 |
@ 7.60 |
|
1-Nov |
1,800 |
@ 8.00 |
The ending inventory that year consisted of 2,400 units. Kettle uses periodic inventory procedure.
a. Compute the cost of the ending inventory using each of the following methods: (1) FIFO, (2)
LIFO, and (3) weighted-average.
b. Which method would yield the highest amount of gross margin? Explain why it does.