1 answer

Cast Iron Grills, Inc., manufactures premium gas barbecue grills. The company uses a periodic inventory system...

Question:

Cast Iron Grills, Inc., manufactures premium gas barbecue grills. The company uses a periodic inventory system and the LIFO cost method for its grill inventory. Cast Iron's December 31, 2018, fiscal year-end inventory consisted of the following (listed in chronological order of acquisition):

Units Unit Cost
8,800 $ 600
5,900 700
9,800 800

The replacement cost of the grills throughout 2019 was $900. Cast Iron sold 46,000 grills during 2019. The company's selling price is set at 200% of the current replacement cost.

Required: 1. & 2. Compute the gross profit (sales minus cost of goods sold) and the gross profit ratio for 2019 under two different assumptions. First, that Cast Iron purchased 47,000 units and, second, that Cast Iron purchased 24,500 units during the year.
4. Compute the gross profit (sales minus cost of goods sold) and the gross profit ratio for 2019 assuming that Cast Iron purchased 47,000 units (as per the first assumption) and 24,500 units (as per the second assumption) during the year and uses the FIFO inventory cost method rather than the LIFO method.


Answers

1&2. Under LIFO method, it is assumed that inventory purchased last is sold first.

Sales Units = 46,000

Selling Price = 200%*Replacement Cost = 200%*900 = $1,800

Cast Iron purchased 47,000 units

Sales 46,000*1800

82,800,000

Less: Cost of goods sold 46,000*900

41,400,000

Gross Profit

$41,400,000

Gross Profit Ratio = Gross Profit/Sales

= 50%

Cast Iron purchased 24,500 units during the year.

Sales 46,000*1800

82,800,000

Less: Cost of goods sold (24,500*900+9,800*800+5,900*700+5,800*600)

37,500,000

Gross Profit

$45,300,000

Gross Profit Ratio = 45,300,000/82,800,000

= 54.71%

4.FIFO method assumes that inventory purchased first will be sold first.

Cast Iron purchased 47,000 units:

Sales 46,000*1800

82,800,000

Less: Cost of goods sold (8,800*600+5,900*700+9,800*800+21,500*900)

36,600,000

Gross Profit

$46,200,000

Gross Profit Ratio = 46,200,000/82,800,000

= 55.80%

Cast Iron purchased 24,500 units during the year:

Sales 46,000*1800

82,800,000

Less: Cost of goods sold (8,800*600+5,900*700+9,800*800+21,500*900)

36,600,000

Gross Profit

$46,200,000

Gross Profit Ratio = 46,200,000/82,800,000

= 55.80%

.

Similar Solved Questions

1 answer
A wooden artifact is found to have a 14C activity of 6.1 disintegrations per second. Given...
A wooden artifact is found to have a 14C activity of 6.1 disintegrations per second. Given that the 14C activity of an equal mass of fresh-cut wood has a constant value of 15.2 disintegrations per second, determine the age (years) of the artifact. The half-life of carbon-14 is 5715 years....
1 answer
A mountain biker encounters a jump on a race course that sends him into the air...
A mountain biker encounters a jump on a race course that sends him into the air at 60o to the horizontal. If he lands at a horizontal distance of 46.0 m and 19.0 m below his launch point, what is his initial speed (in m/s)? m/s...
1 answer
Could you solve these two questions, please Describe the relationship between the following two molecules: Br...
could you solve these two questions, please Describe the relationship between the following two molecules: Br t-Bu t-Burth HOYH HXXE Identical molecules Enantiomers Diastereomers Constitutional isomers Conformational isomers Submit Answer Tries 0/1 Describe the relationship between the following two...
1 answer
CVP Analysis and Cost Structure (Single Product). Fallon Company produces road bikes. The company has annual...
CVP Analysis and Cost Structure (Single Product). Fallon Company produces road bikes. The company has annual fixed costs totaling $10,000,000 and variable costs of $600 per unit. Each unit of product is sold for $1,000. Fallon expects to sell 70,000 units this year. Required: Find the break-even p...
1 answer
Chapter 3, Reserve Problem 3/071 if the weight of the boom is negligible compared with the...
Chapter 3, Reserve Problem 3/071 if the weight of the boom is negligible compared with the applied 35-kN load, determine the cable tensions Ti and T2 and the for ce acting at the ball joint at A. y 4 m Ti 5 m 2 m 35 kN kN...
3 answers
When an individual feels that both health and illness are a product of psychological, biological, and social forces he or she believes in the - Biomedical model - Western Perspective Model - Biopsychosocial model - Scientific approach to medicine - Prima
When an individual feels that both health and illness are a product of psychological, biological, and social forces he or she believes in the- Biomedical model- Western Perspective Model- Biopsychosocial model- Scientific approach to medicine- Primary medicine perspectiveI believe the answer is biom...
1 answer
An analysis of comparative balance sheets, the current year’s income statement, and the general ledger accounts...
An analysis of comparative balance sheets, the current year’s income statement, and the general ledger accounts of Guillen Corp. uncovered the following items. Assume all items involve cash unless there is information to the contrary. Indicate where each item should be reported in the stateme...
1 answer
Which energy relationship corresponds to a fission process? (energy released) > (total binding energy of fragments)...
Which energy relationship corresponds to a fission process? (energy released) > (total binding energy of fragments) O (total binding energy of fragments) > (binding energy of original nucleus) (binding energy of original nucleus) < (energy released)...
1 answer
Show the mechanism for the following reaction conducted at –5 °C in CCl4: cyclohexene bromine yields...
Show the mechanism for the following reaction conducted at –5 °C in CCl4: cyclohexene bromine yields a dibromocyclohexane Draw structures – including charges and electrons – and add curved arrows. Details count. Map do cyclohexene + bromine yields a dibromocyclohexane Draw str...
1 answer
Comprehensive Problem 5-84 (LO 5-1, LO 5-2, LO 5-3) (Algo) Charlie was hired by Ajax this...
Comprehensive Problem 5-84 (LO 5-1, LO 5-2, LO 5-3) (Algo) Charlie was hired by Ajax this year as a corporate executive and a member of the board of directors. During the current year, Charlie received the following payments or benefits paid on his behalf. Salary payments $ 104,500 Contributions to ...
1 answer
This is the entire question, there were no tables or any other information given. You just...
This is the entire question, there were no tables or any other information given. You just sold an at-the-money European Call option on a stock that pays no dividends. The size of this option contract is 100, the current stock price is $50, and the volatility and interest rate parameters are o = 25%...
1 answer
Applied Overhead and Unit Overhead Cost: Plantwide Rates Seco, Inc., produces two types of clothes dryers:...
Applied Overhead and Unit Overhead Cost: Plantwide Rates Seco, Inc., produces two types of clothes dryers: deluxe and regular. Seco uses a plantwide rate based on direct labor hours to assign its overhead costs. The company has the following estimated and actual data for the coming year: Estimate...
1 answer
How do you find the limit of #(4x² -2x^15 +17)/(3x^6 - 7x^3 + 216)# as x approaches infinity?
How do you find the limit of #(4x² -2x^15 +17)/(3x^6 - 7x^3 + 216)# as x approaches infinity?...
1 answer
Please help!! Decide if each of the following molecules is chiral or achiral. CH₃ CH3CHOCHZ SH...
please help!! Decide if each of the following molecules is chiral or achiral. CH₃ CH3CHOCHZ SH CH3CH2CHCHE он CH3CH2CCH2CH3 CH2CH3 CH₃ Сн,сненсн,он CHE Which of the following compounds contain stereocenters (asymme...
1 answer
5. A free particle has the initial wave function, where A and a are positive real...
5. A free particle has the initial wave function, where A and a are positive real constants. (a) Normalize ψ(x,0). (b) Find φ(k). (c) Construct $(z,t), in the forn of an integral. (d) Discuss the limiting cases (a very large, and a very small)....
1 answer
VERSION 0000000 1 Question 14 [2.5 marks] What is the output of the following code fragment?...
VERSION 0000000 1 Question 14 [2.5 marks] What is the output of the following code fragment? value 0 for i in range (0, 25, 10) : print (value, end-" ") for j in range (0, 10, 5): value + 1 print ('final value', value ) (a) 0 2 4 final value 6 (b) 0 2 4 6 final value 8 (c) 0 3 6 fina...
1 answer
Please use ILAC method in solving this problem. Thank you in advance! Jack and Ralph are...
Please use ILAC method in solving this problem. Thank you in advance! Jack and Ralph are neighbours. Jack is a 20-year-old student who likes to play loud video games in the early hours of the morning, until around 3am, when most people are sleeping. Jack has been doing this for two months, most...
1 answer
PLEASE ATTACH A SCREENSHOT OF THE RE-POPULTATED TABLE AT THE END Objectives Part A: Configure Devices and Verify Conne...
PLEASE ATTACH A SCREENSHOT OF THE RE-POPULTATED TABLE AT THE END Objectives Part A: Configure Devices and Verify Connectivity . Part B: Gather Information with Show Commands Tasks Create the following network topology on Packet Tracer Addressing Table 10.10.10.0/24 10 SW1 Device InterfaceIP Addres...