Wednesday, 4 October 2017

The following information pertains to Mason Company for 2016:

The following information pertains to Mason Company for 2016:

  
  Beginning inventory 132  units @ $ 38  
  Units purchased 390  units @ $ 57  



Ending inventory consisted of 50 units. Mason sold 472 units at $114 each. All purchases and sales were made with cash. Operating expenses amounted to $3,675.


Required
a. Compute the gross margin for Mason Company using the following cost flow assumptions: (1) FIFO, (2) LIFO, and (3) weighted average.  

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Explanation:


 b. What is the amount of net income using FIFO, LIFO, and weighted average? (Ignore income tax considerations.)
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Explanation:
  FIFO   LIFO   Weighted Avg.
 Sales $ 53,808     $ 53,808     $ 53,808  
  Cost of goods Sold   (24,396 )     (25,346 )     (24,636 )
 










 Gross margin   29,412       28,462       29,172  
 Operating expenses    3,675        3,675        3,675  
 










  Net income $ 25,737     $ 24,787     $ 25,497  
 























c. Compute the amount of ending inventory using (1) FIFO, (2) LIFO, and (3) weighted average. 

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Explanation:
  Ending Inventory          
  FIFO 50 @ $57   $ 2,850    
  LIFO 50 @ $38     1,900    
  Weighted average 50 @ $52.195     2,610*  



*rounded to the nearest whole dollar.