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