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Mercado Company's inventory transactions in the fiscal year ended December 31, 2002, follow: ...

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Accounting

Mercado Company's inventory transactions in the fiscal year ended December 31, 2002, follow:

Jan.

1

Beginning Inventory

775 units @ $52/unit

Jan.

10

Purchase

600 units @ $53/unit

Feb.

13

Purchase

225 units @ $54/unit

Jul.

21

Purchase

285 units @ $55/unit

Aug.

5

Purchase

450 units @ $56/unit

Mercado Company uses a perpetual inventory system. Its inventory had a selling price of $115 per unit, and it entered into the following current-year sales transactions:

Feb.

15

Sales

515 units @ $115/unit

Aug.

10

Sales

275 units @ $115/unit

Required:

1. Compute the cost of goods available for sale and the number of units available for sale.

2. Compute the number of units in the ending inventory.

3. Compute the cost assigned to ending inventory using (a) FIFO; (b) Specific Identification; and (c) Weighted-Average.

4. Compute the gross profit earned by the company for each of the costing methods in part 3.

Analysis Component

5. If Mercado Company's manager earns a bonus based on a percentage of gross profit, which method of inventory costing will the manager likely prefer?

This assignment from teacher, there are no additional information.

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