Answer:
1.FIFO =
Cost of Goods Sold = $13850
Ending inventory = $400 (220 units)
2. LIFO
Cost of Goods Sold = $14600
Ending inventory = $4150
3. Gross Margin
FIFO = 60.65%
LIFO = 58.52%
Explanation:
Please refer attached tables for the question as well as the explanation of answers.
1. FIFO, First-In-First-Out is whereby the inventory that comes in first, is sold first. Common for perishables such as vegetables that cannot be left in store for too long. Refer FIFO table in attachment.
2. LIFO, Last-In-First-Out is whereby the inventory that comes last is the first to be sold. This is generally for bulky goods piled one one top of the other. So the last received (piled on top) is used first. Refer LIFO table in attachment.
3. Gross Margin = [(Total Revenue - Cost of Goods Sold) / Total Revenue] x 100
FIFO
Total Revenue = 880 units x $40 = $35200
Cost of Goods Sold = $13850
Gross Margin = [(35200 - 13850) / 35200] x 100 = 60.65%
LIFO
Total Revenue = 880 units x $40 = $35200
Cost of Goods Sold = $14600
Gross Margin = [(35200 - 14600) / 35200] x 100 = 58.52%
