Accounting Ohsweken Outdoor Stores Inc. uses a perpetual inventory system and has a beginning inventory, as at April 1, of 175 tents. This consists of 44 tents at a cost of $209 and 131 tents at a cost of $229 each. During April, the company had the following purchases and sales of tents:
|Date||Units||Unit Cost||Units||Unit Price|
a. Determine the cost of goods sold and the cost of the ending inventory using FIFO.
b. Calculate Ohsweken Outdoors's gross profit and gross profit margin for the month of April.
First in, First out method:
The cost flow assumption of the first in, first out (FIFO) technique of inventory valuation is that the first things acquired are also the first products sold. This assumption is regarded as the most theoretically valid inventory valuation technique since it closely fits the actual flow of goods in most organizations. Because selling the oldest products first decreases the risk of inventory obsolescence, the FIFO flow principle is a sensible one for a corporation to adopt.
Answer and Explanation:
|Units||Unit cost||Cost of goods sold|
|A||B||A * B|
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fromChapter 6 / Lesson 11
Inventory valuation methods are ways that companies place a monetary value on the items they have in their inventory. Discover different inventory valuation methods, including specific identification, First-In-First-Out (FIFO), Last-In-First-Out (LIFO), and weighted average.