Process Improvement Project: Phase 2 and 3
January 10, 2021Building a Competitive Advantage
January 10, 2021Cost of Ending Inventory and Cost of Goods Sold
During April, Leary Company sold 1,000 units of Product Q. Product Q’s beginning inventory and purchases during the month are shown below. (Assume the periodic inventory system is used.)
Assignment Template attached below.
| April 1 | Beginning inventory | 200 units @ $1 |
| April 5 | Purchases | 200 units @ $2 |
| April 10 | Purchases | 200 units @ $3 |
| April 15 | Purchases | 200 units @ $4 |
| April 20 | Purchases | 200 units @ $5 |
| April 25 | Purchases | 200 units @ $6 |
Required: Use the periodic inventory system to answer the following questions.
- Compute the total units available for sale.
- Compute the total cost of the units available for sale.
- Compute the FIFO cost of goods sold (COGS) in dollars.
- Compute the FIFO ending inventory (EI) in dollars.
- Compute the LIFO COGS in dollars.
- Compute the LIFO EI in dollars.
- Compute the weighted average COGS in dollars.
- Compute the weighted average EI in dollars.
- Prove the sum of COGS and EI for each method equals the goods available for sale for both units and dollars.
- Compute the gross profit (GP) for each method assuming the 1000 units were sold for $10 each.
Instructions:
Complete this assignment using an Excel spreadsheet, and date and explain each entry on your deliverable.