Compute and evaluate gross profit percentage and inventory turnover
Response to the following problem:
Lasley & Linderman, a partnership, had the following inventory data:
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2013
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2014
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Ending inventory at:
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FIFO Cost...............
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$ 1 8,000
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$ 23,000
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LIFO Cost...............
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8,000
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19,000
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Cost of goods sold at:
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FIFO Cost...............
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$80,900
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LIFO Cost...............
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84,900
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Sales revenue
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154,000
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Lasley and Linderman need to know the company's gross profit percentage and rate of inventory turnover for 2014 under
1. FIFO.
2. LIFO.
Which method produces a higher gross profit percentage? Inventory turnover?