oft Touch Company sells leather furniture. The following schedule relates to the companys inventory for...
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Accounting
oft Touch Company sells leather furniture. The following schedule relates to the companys inventory for the month of April:
Cost
Sales
April 1
Beginning inventory
75 units
$45,225
3
Purchase
50 units
31,650
5
Sale
26 units
$29,848
11
Purchase
24 units
15,528
15
Sale
55 units
69,575
22
Sale
44 units
50,248
28
Purchase
46 units
31,096
Soft Touch uses the perpetual inventory system.
Calculate Soft Touch Companys cost of goods sold, gross margin, and ending inventory using: i. FIFO ii. Weighted-average (Round calculations for cost per unit to 2 decimal places, e.g. 10.52 and final answers to 0 decimal places, e.g. 61,052.)
Cost of Goods Sold
Gross Margin
Ending Inventory
i.
FIFO
$
$
$
ii.
Weighted-average
$
$
$
Which cost formula produced the higher gross margin? (Round answers to 2 decimal places, e.g. 61.05%.)
Gross Margin Ratio
FIFO
%
Weighted-average
%
FIFOWeighted-average produces the higher gross margin ratio.
Answer & Explanation
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