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Problem $5-3$A Perpetual: Alternative cost flows P$1$

Montoure Company uses a perpetual inventory system. It entered into the following calendar$-$year purchases

and sales transactions. $($For specific identification, units sold consist of $600$ units from beginning inventory,

$300$ from the February $10$ purchase, $200$ from the March $13$ purchase, $50$ from the August $21$ purchase, and

$250$ from the September $5$ purchase.$)$

Date Activities Units Acquired at Cost Units Sold at Retail

Jan. $1$ Beginning inventory $600$ units @ $$45$ per unit

Feb. $10$ Purchase $400$ units @ $$42$ per unit

Mar. $13$ Purchase $200$ units @ $$27$ per unit

Mar. $15$ Sales $800$ units @ $$75$ per unit

Aug. $21$ Purchase $100$ units @ $$50$ per unit

Sep. $5$ Purchase $500$ units @ $$46$ per unit

Sep. $10$ Sales $600$ units @ $$75$ per unit

Totals $1,800$ units $1,400$ units

Required

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

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

$3.$ Compute the cost assigned to ending inventory using $($a$)$ FIFO, $($b$)$ LIFO, $($c$)$ weighted average, and $($d$)$

specific identification. $($Round all amounts to cents.$)$

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

$!$Analysis Component!

$5.$ The company$$s manager earns a bonus based on a percent of gross profit. Which method of inventory

costing produces the highest bonus for the manager?

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