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problem: Parker Company uses a perpetual inventory system. It entered into the following calendar-year 2005 buy and sales transactions:

Date

Activities

Units Acquired at Cost

Units sold at retail

Jan. 1

Beginning inventory

600 units @ $44/unit

 

Feb. 10

Purchase

200 units @ $40/unit

 

Mar. 13

Purchase

100 units @ $20/unit

 

Mar. 15

Sales

 

400 units @ $75/unit

Aug. 21

Purchase

160 units @ $60/unit

 

Sept. 5

Purchase

280 units @ $48/unit

 

Sept. 10

Sales

 

200 units @ $75/unit

 

Totals

1,340 Units

600 units

Required

[A] find out cost of goods available for sale & the number of units available for sale.

[B] find out the number of units in ending inventory.

[C] find out the cost assigned to ending inventory using (A) FIFO, (B) LIFO, (C) specific identification

[Note: The units sold consist of 500 units from beginning inventory & 100 units from the March 13 (C) purchase & (D) weighted average.

[D] find out the gross profit earned by the company for each of the four costing methods in part 3.

Analysis Component

[E] If the firm's manager earns a bonus based on a percent of gross profit, which method of inventory costing will the manager likely prefer?

Cost Accounting, Accounting

  • Category:- Cost Accounting
  • Reference No.:- M922353

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